Chancellor Rachel Reeves is poised to introduce a so-called 'milkshake tax' in her forthcoming Budget, as part of a series of measures aimed at balancing the nation's books.
The move would see the end of a long-standing exemption for milk-based drinks from the Soft Drinks Industry Levy, a tax currently applied to sugary soft drinks.
What the New Milkshake Tax Means
According to reports from The Telegraph, the Chancellor is preparing to not only remove the dairy-based drinks exemption but also to lower the sugar threshold for the levy from 5g to 4g per 100ml.
This change means producers of high-sugar milkshakes would be required to pay at least 18p per litre in tax, a cost that could potentially be passed on to consumers.
The decision comes after speculation that Ms Reeves might break a Labour manifesto pledge by increasing income tax, a plan she reportedly abandoned over fears of angering voters and party MPs.
Political and Economic Fallout
The reported plan has already drawn sharp criticism from the opposition. Conservative shadow chancellor Mel Stride condemned the move, stating it would "punish businesses that played by the rules" and was being implemented merely to save the Chancellor's political standing.
When approached for comment by The Independent, a Treasury spokesperson declined to address what they termed "Budget speculation."
The pre-Budget rumours are being partly blamed for the UK's recent economic slowdown. Official figures revealed that economic growth slowed to 0.1% in the third quarter, down from 0.3% in the previous three months.
Broader Economic Concerns
Andy Haldane, the former chief economist at the Bank of England, told Sky News that the Budget build-up has become a "real circus" and that the speculation has directly harmed economic growth.
He argued that the uncertainty has caused both businesses and consumers to "hunker down," reducing spending and contributing to the weaker-than-expected growth figures.
While Chancellor Reeves attributed the poor performance to the Jaguar Land Rover production shutdown following a cyber attack, Mr Haldane was unequivocal, stating the Budget rumours had "without any shadow of a doubt" had a direct impact.
He called for an overhaul of the Budget process to prevent such damaging leaks in the future.
