Chancellor Rachel Reeves has laid out a stark economic plan in her latest budget, signalling higher taxes and stringent spending cuts to address the UK's mounting borrowing costs. The move comes as the government grapples with rising debt levels and sluggish economic growth.
Key Measures in the Budget
The budget outlines several critical measures aimed at stabilising public finances:
- Income Tax Adjustments: Higher earners will face increased income tax rates, while thresholds remain frozen, dragging more workers into higher brackets.
- Corporation Tax Hike: Businesses will see a rise in corporation tax, a move criticised by industry leaders.
- Public Sector Cuts: Government departments face further austerity, with non-essential spending slashed.
Impact on Households and Businesses
The budget's measures are expected to squeeze household budgets, with middle-income families bearing the brunt of frozen tax thresholds. Meanwhile, businesses warn that higher corporation tax could stifle investment and innovation.
Rachel Reeves defended the plan, stating, "These tough decisions are necessary to secure the UK's financial future. We must balance the books while protecting vital public services."
Political and Economic Reactions
Opposition parties have slammed the budget as "short-sighted and punitive," arguing it risks derailing economic recovery. Economists, however, are divided—some praise the fiscal discipline, while others fear it could dampen consumer spending and growth.
The Office for Budget Responsibility (OBR) will publish its full assessment next month, shedding further light on the long-term implications.
