Britain’s left-wing Starmer government is approaching its moment of truth. Today, Chancellor of the Exchequer Rachel Reeves will present the budget.
The red briefcase containing the hefty document is still sealed, and the government has been delivering mixed messages in recent weeks. But it seems clear that new tax increases are coming. Or not?
“We won’t have to implement another budget like this,” said Chancellor of the Exchequer Rachel Reeves as she presented her first Labour government budget. In it, the government had more or less kept the election promise that brought Prime Minister Keir Starmer to power in 2023. Starmer said at the time that he would keep taxes for workers as low as possible. No higher basic taxes or higher VAT.
At the time, Labour focused primarily on employers and businesses, sparing workers and government institutions. Fourteen years of austerity measures implemented by Conservative governments were still fresh in everyone’s mind.
Labour intended to restore order to the public finances, reduce the soaring national debt, lower the cost of living, and boost the economy. These remain its primary objectives today.
But the United Kingdom is in as bad a position, if not worse, than a year ago. Inflation remains high, the government has to borrow more, up to €130 billion a year, and the engine of the sixth-largest global economy continues to sputter.
Some of these setbacks are pure bad luck. There was already the ageing population and the cost of the pandemic, there’s still the aftermath of Brexit, but now geopolitical instability has been added to the mix: the war in Ukraine and US President Trump’s tariff war.
