The UK Labour government, led by Keir Starmer and Rachel Reeves, is struggling to maintain its promise of honesty about public finances. Facing slumping poll ratings, lack of economic growth, and immense pressure from rising costs and high national debt, the government is expected to raise taxes in the autumn budget, despite earlier reversals on spending cuts.
Starmer and Reeves promised honesty about public finances. Can they stay the course?
Tax and spendingPoliticsLabourKeir StarmerRachel ReevesOffice for Budget ResponsibilityConservativesInstitute for Fiscal StudiesResolution FoundationEconomic growth (GDP)Budget deficitEconomic policyGovernment borrowingThinktanksUK
AI Summary
TL;DR: Key points with love ❤️The UK Labour government, led by Keir Starmer and Rachel Reeves, is struggling to maintain its promise of honesty about public finances. Facing slumping poll ratings, lack of economic growth, and immense pressure from rising costs and high national debt, the government is expected to raise taxes in the autumn budget, despite earlier reversals on spending cuts.
Trending- 1 Last summer: General election, Keir Starmer's 'no magic wand' phrase, Rachel Reeves' downbeat statement and winter fuel allowance cuts
- 2 Since 2010: Growth has been disappointing in the UK economy
- 3 Last decade: Wages have stagnated for much of this period
- 4 May: Britain's economy unexpectedly shrank
- 5 This week: Office for Budget Responsibility (OBR) made clear pressures on public finances
- 6 Next week: Rachel Reeves will address the OBR report in her Mansion House speech
- 7 Autumn: Chancellor is widely expected to put up taxes in the budget
- Public finances in an unsustainable position in the long run
- Expected tax increases (e.g., freezing income tax thresholds)
- Continued weakness of the UK economy
- Wage stagnation for much of the last decade
- Public concern about the economy
- Government facing difficult choices and potential loss of public trust
What: The UK Labour government is facing challenges in maintaining honesty about public finances and addressing the country's economic situation, including high debt and lack of growth.
When: Last summer (general election, July last year - Reeves' statement); this week (OBR report); next week (Reeves' Mansion House speech); since 2010 (disappointing growth); last decade (wages stagnated); May (economy unexpectedly shrank).
Where: UK; Salford (audience for debate); Downing Street garden; Treasury; Mansion House.
Why: Desire to cut debt, slumping poll ratings, lack of economic growth, inexorable rise in state pension costs (due to triple lock and ageing society), national debt at a historic high, high debt interest payments, and interest rates recovering from Liz Truss's mini-budget. Underlying issues include the global financial crash, pandemic, and energy crisis.
How: Starmer initially emphasized no 'magic wand' solutions. Reeves made downbeat statements and cut winter fuel allowance (later reversed). The government is adhering to self-imposed fiscal rules, which means avoiding more borrowing and austerity, leading to an expectation of tax increases (e.g., freezing income tax thresholds).