Transport Secretary Heidi Alexander has addressed concerns that recent leaks about potential tax changes ahead of the upcoming Budget have negatively impacted the economy. Critics argue that ongoing speculation around tax increases has created uncertainty for businesses and consumers. Former Bank of England chief economist Andy Haldane attributed the stagnation of economic growth to such leaks, labeling the situation a “fiscal fandango.”
In response, Alexander emphasized that speculation is a regular occurrence before Budget announcements and insisted that the Chancellor, Rachel Reeves, has been clear about her priorities. Reeves is anticipated to announce tax increases in her forthcoming Budget to address a significant funding gap in government spending plans. Indications suggest potential increases in income tax rates, which would contradict Labour’s previous commitment not to raise these taxes. However, recent anonymous reports indicated that Reeves might reconsider this after more favorable economic forecasts emerged.
The practice of leaking Budget details is sometimes employed by governments to gauge public reaction and prevent market shocks, although it can lead to criticism like that voiced by Haldane. Alexander countered claims that leaks have disrupted the economy, pointing out the complexities of the current financial landscape influenced by global conditions and changing productivity forecasts.
Meanwhile, the Conservatives have called for an inquiry into the leaks, asserting they can significantly influence financial markets. Shadow Chancellor Mel Stride expressed concerns over whether ministers authorized such briefings or if unauthorized disclosures occurred within the Treasury.
Reeves is expected to unveil various smaller tax adjustments while reconsidering the freeze on income tax thresholds. Additionally, she aims to address issues like NHS waiting lists and the national debt, while also possibly scrapping the two-child benefit cap, a measure originally introduced by the Conservatives.
Source: https://www.bbc.com/news/articles/clykvql14r7o?at_medium=RSS&at_campaign=rss