The U.K. Treasury on Wednesday revealed Finance Minister Rachel Reeves will deliver the nation’s Autumn Budget on Nov. 26 amid heightened pressure to resolve a fiscal conundrum over spending, taxation and borrowing.
The U.K.’s long-term borrowing costs rose this week amid market jitters over the forthcoming budget, and how the British finance minister will meet self-imposed fiscal “rules” to make sure day-to-day spending is funded by tax receipts, rather than borrowing, and to lower U.K. debt over the next few years.
Economists predict Reeves will have hike taxes in order to meet her rules, and to maintain some fiscal “wiggle” room of around £10 billion in her budget — headroom which has already been eroded by U-turns on welfare spending cuts and rising borrowing costs. Reeves has repeatedly dismissed the possibility of bending her own fiscal rules on borrowing.
“Barely a day goes by without speculation about new and inventive ways the Chancellor could generate revenue in the Autumn Budget. Our view is that Reeves will need to raise £18-28 billion [$24-37 billion] of revenue mostly via higher taxes,” Ruth Gregory, deputy chief U.K. economist at Capital Economics, said in analysis Tuesday.
