Rachel Reeves has used the annual meetings of the International Monetary Fund in Washington to prepare the British public for a tough budget next month, warning that tax rises and spending cuts are on the horizon. The chancellor pinned the blame on the Conservatives and the aftermath of Brexit, insisting the package would not amount to a return to austerity.
Speaking to the Guardian, Reeves said higher taxes on the wealthy “will be part of the story” and that she was being honest with the public. “I think people can see that this year, in 2025, the world’s been a very, very volatile place,” she added.
The IMF endorsed the UK as a “beacon of economic stability”, but its latest report painted a dim global outlook and warned of worsening inflation in the UK. The report offered only limited consolation in a slight improvement to the growth forecast.
However, the chancellor faces a significant challenge from the Office for Budget Responsibility, which has adjusted its model to produce a more pessimistic productivity forecast. The Treasury has privately argued that the change could have been made earlier, which would have rendered previous fiscal plans unaffordable.
