Chancellor Rachel Reeves is confronting what a senior cabinet minister has labelled a 'growth emergency' for Britain, just days before she is set to deliver her crucial Budget.
Pessimistic Forecasts and Budget Pressures
The independent Office for Budget Responsibility (OBR) is preparing to release its most downbeat assessment of the UK's economic prospects in 15 years. This significant downgrade, expected to extend all the way to 2029, paints a stark picture of the challenges ahead.
The bleak outlook is largely attributed to a worrying decline in expected productivity across the economy. Compounding this issue are previous estimations by the fiscal watchdog that have since been acknowledged as incorrect, creating a more difficult starting point for the Treasury.
Proposed Tax Measures Spark Concern
In response to a substantial financial shortfall, Chancellor Reeves is reportedly finalising plans for new tax rises. These are believed to include a new mansion tax on properties valued over £2 million and an increase in the bank levy.
However, these proposed measures are already causing alarm among experts and business leaders. Many warn that such taxes could inadvertently hinder economic growth further at a time when the country can least afford it.
Broader Economic Impact and Criticism
The Chancellor's strategy also faces scrutiny over plans to raise employer national insurance contributions. Critics argue that placing additional financial burdens on businesses could stifle investment and hiring, creating a headwind for the very growth the government is trying to stimulate.
Despite a recent dip in the headline inflation rate, the government admits that the high cost of living remains a 'big burden' for households across the nation, underscoring the delicate balancing act required in the upcoming Budget announcement.
