The United Kingdom’s Treasury chief Rachel Reeves has stood up to deliver a crucial tax-raising budget statement to MPs following an unprecedented leak from the government’s independent forecaster that basically laid out her measures.
The biggest change in terms of money raised, according to the leak from the Office for Budget Responsibility, is freezing the levels at which earners pay the UK’s different tax levels, meaning as wages rise, more people fall into higher tax brackets.
Other measures include a mansion tax on high-valued properties, changes to the capital tax regime and a cut to tax-free provisions for private pensions.
According to the leaked documents from the OBR, which it has apologised for, the government will raise 26 billion pounds ($A53 billion) in 2029-30.
The OBR blamed a “technical error” for the leak, saying it went “live on our website too early this morning”.
It said it will report to all relevant authorities, including the Treasury, as to what happened.
The leak is a further embarrassment for the UK’s Labour government following weeks of weeks of speculation and mixed signals that unsettled the markets.
The budget, Reeves’ second since Labour returned to power after 14 years with a landslide election victory in July 2024, could prove pivotal in the fortunes of both Reeves and her boss, Prime Minister Keir Starmer.
The overall message in the budget is much the same at it was in her first budget a little more than a year ago.
She insisted at the time that it would be the one and only big tax-raising budget in this parliamentary term, which is due to run to 2029.
Unfortunately for Reeves, the the UK economy, the world’s sixth-largest, is not doing as well as she hoped, with many critics blaming her decision last year to slap taxes on business.
Although there were signs that the economy was improving in the first half of the year, when it was the fastest-growing among the G7 leading industrialised countries, it has faltered again.
The budget is a high-stakes moment for Reeves and Starmer, who is facing mounting concern from Labour MPs over his dire poll ratings.
Opinion polls consistently put Labour well behind the populist Reform UK party led by Nigel Farage.
The next election does not have to be held until 2029, and the government continues to hope that its economic measures will spur higher growth and ease financial pressures.
But speculation is swirling about a potential challenge to Starmer’s leadership from within his party and analysts say a misfiring budget could add to the sense of crisis within the government.
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