Shrinking GDP Puts Reeves on the Spot Over Future Tax Hikes

Rachel Reeves was unable to rule out further tax rises in the Autumn budget as it was announced that the UK economy shrank by 0.3% in April.

The latest GDP figures revealed by the Office for National Statistics are worse than the 0.1% fall expected by economists, adding to growing scrutiny of the Chancellor just hours after her spending review.

The review marked a watershed moment for the Government, with Ms Reeves promising an extra £29 billion a year for the NHS and the biggest cash injection into social and affordable housing in 50 years.

But economists have questioned whether tax rises were “almost inevitable” in the Autumn because of the strain it could put on public finances.

When quizzed on Sky News about whether she may have to raise taxes further on Thursday, Ms Reeves appeared to avoid the question, saying that “she was not going to write budgets for the future”.

The Chancellor added that she would “never have to repeat a budget like the one I set out in October last year”, saying she had to draw a line under the mismanagement of the previous Conservative Government.

Pressed further on analysts' predictions that council tax will have to rise by the maximum amount, the Chancellor repeated that the government’s priority was not to increase taxes on working people, citing how national insurance, income tax and VAT have not been raised.

She told Sky News: “We recognise that the last few years, with hikes in interest rates, with hikes in energy prices, with higher food prices in the shops that people have been through a lot. That’s why it’s really important to be and really important to this government to honour that commitment to not increase those key taxes that the government levies on ordinary people.”

Similarly, when asked on LBC if she could reassure voters that there would be no tax rises in the Autumn, Ms Reeves said: “I think it would be very risky for a chancellor to try and write future budgets in a world as uncertain as ours."

Ms Reeves also denied that she is a “Klarna Chancellor” who announced a “buy now, pay later” spending review, insisting that all measures announced in the spending review were fully funded.

Responding to the news that the economy shrank further than expected in April, the Chancellor acknowledged the numbers were “clearly disappointing” but insisted her spending review, delivered to MPs on Wednesday, would help deliver growth.

Source: The Standard