A Labour insider said that changes to the planning system were among a number of measures the Chancellor had “up No 11’s sleeve” to buy extra fiscal headroom for the autumn Budget.
However, growth is expected to slow in the coming months as Donald Trump’s tariffs and April’s national insurance rise take their toll.
With a safety net of just £9.9bn, economists believe she may have no choice but to raise taxes if she does not want to change her ules.
The assessment was backed by Robert Wood, chief UK economist of Pantheon Macroeconomics, who told The i Paper: “Reeves will almost certainly have to raise taxes in the Budget unless she cuts back spending plans given limited headroom and likely downgrades to growth forecasts.”
However, Labour MPs are worried about the political impact of increasing taxes given that the tax burden is already at a post-war high.
Read Next
square HAMISH MCRAE Newsletter (£)Read More
A possible way out for Reeves is if she can convince the Government’s independent forecaster, the Office for Budget Responsibility, to formally score more of Labour’s policies as growth-boosting.
A Labour insider said that the Treasury was working “on a few fiscal politics moves that are likely to help partially around OBR forecasting and headroom”.
Planning reform ‘to boost economy’
At the Spring Statement in March, the Treasury was able to convince the OBR that plans to make it easier to build houses would boost the economy by £6.8bn by 2030.
A source close to Reeves said: “I don’t think anyone can doubt the Chancellor’s commitment to push on with planning reform given she has set the agenda on this issue and led the push which saw the OBR score it in the first place.”
Asked whether the economy would now deteriorate, the spokesman said: “I’m not going to provide forecasts. I’ll leave that to others.”
On the question of whether taxes would rise, he added: “We’ve obviously committed to the manifesto commitment not to increase taxes on working people.
Read More Details
Finally We wish PressBee provided you with enough information of ( Reeves has ‘things up sleeve’ in desperate bid to avoid tax hikes )
Also on site :