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£19.99The upcoming economic statement from the Treasury is being labeled as “Definitely not a Budget.” There will not be the traditional red box outside Number 11, only a “thin book” of new policies accompanied by a “light scorecard” of measures without any additional tax hikes. But what is the purpose of this Spring Statement?
Primarily, it serves as a spring forecast from the Office of Budget Responsibility (OBR), the government’s official forecasters. Due to a slower-than-expected economy and increased government borrowing costs, the OBR forecast has limited the flexibility against Chancellor Rachel Reeves’ strict rules on government borrowing. In response, there have been adjustments to keep the numbers in check.
Low growth and higher borrowing costs have skewed the budgetary figures off course. The chancellor is expected to emphasize how “the world has changed.” In the midst of this course correction, the pressing question remains – can tax rises be avoided, even in this “changed world”? And if austerity measures are avoided, where will the necessary funding come from?
While the Spring Statement may not introduce significant tax measures, it could leave the window open for such actions in the autumn Budget. Some economists anticipate tax increases in order to accommodate rising defense spending. Additionally, there is speculation about engaging the public in a discussion regarding potential tax changes. It is crucial to monitor the developments in the welfare spending cuts and civil service admin costs, as these factors will significantly impact the economic landscape
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