Taxes must rise to meet target, says thinktank
Summary
An economic thinktank, the National Institute of Economic and Social Research (Niesr), advises that the UK government may need to raise taxes in the autumn to meet its borrowing rules. The government's current budget is projected to miss its target by £41.2 billion due to lower growth and changed welfare policies. The thinktank suggests tax increases or spending cuts to make up the shortfall and meet fiscal goals.Key Facts
- The thinktank involved is the National Institute of Economic and Social Research (Niesr).
- The UK government is predicted to miss its budget target by £41.2 billion.
- Tax increases and spending reductions are proposed to meet borrowing rules.
- The Chancellor, Rachel Reeves, established borrowing rules, focusing on covering day-to-day spending through tax revenue.
- A significant factor in the budget shortfall is weaker-than-expected economic growth.
- Welfare cuts initially planned to save £5.5 billion by 2030 have been relaxed, reducing expected savings.
- Niesr suggests raising taxes may reassure investors and potentially lower government borrowing costs.
- The UK economy is expected to grow modestly, with inflation being higher than desired.
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