Labour’s Rachel Reeves has delivered her first Budget as Chancellor of the Exchequer, marking the first time in 14 years that Labour has been in power. Reeves announced a significant series of investments in the health service and schools, paid for by a £40bn tax increase and a rule change permitting the government to borrow £127bn this year. Reeves’ budget also included an emergency cash injection into the National Health Service, with the Chancellor gambling that voters will reward the government for stabilizing Britain’s crumbling services.
According to the Financial Times, Reeves introduced the largest Budget tax increase in a generation, with businesses and the wealthy bearing the burden of Rahcel’s changes. The paper adds that the tax increases are intended to fix the country’s finances and public services. The increased borrowing will subsequently fund an additional £100bn of capital spending and bring about a significant expansion of the state, consequently defining political battle lines for years to come.
The i branded the budget a great £40bn tax gamble, with Reeves hoping to boost growth through increasing investment. However, her tax increases are set to cost households an extra £300 per year, and the Office for Budget Responsibility warns that the rise in employers’ national insurance will most likely hit employment rates. The tax burden has reached its highest level on record according to the Times, who further state that there will be an increase in capital gains tax and temporary freezes to income and inheritance tax thresholds.
The Daily Mirror praised Reeves’ investment in public spending, stating that it would help “undo 14 years of Tory negligence”. The budget saw tax breaks for non-doms and private schools come to an end, with Reeves announcing: “This is the start of a decade of renewal”. However, the Daily Telegraph criticised Reeves’ tax increases, stating they would crush the hope of higher growth and ultimately damage living standards. The OBR has also reduced its growth forecasts for most of this decade, prompting an economist to warn that the sugar rush of economic growth from higher government spending will quickly wane.
The Daily Mail took a similarly negative stance, branding Reeves’ budget a tax bombshell that would most significantly impact Britain’s strivers. The paper reported on the bleak OBR forecasts that, according to their report, made a mockery of Reeves’ ambition to be Britain’s most pro-growth Chancellor in history
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