The Chancellor announced on Wednesday that she will lay out her tax-and-spend plans for the coming year on 26 November, later than the usual date of the autumn Budget – and the last Wednesday on which it is possible to describe it as an “autumn” event.
Relatively weak economic growth and a rise in long-term borrowing costs for the UK Government mean that as things currently stand, Reeves would need to raise tens of billions of pounds through tax hikes or spending cuts in order to avoid breaching her self-imposed fiscal rules, which determine how much she is allowed to borrow over a five-year timeframe.
The Chancellor is also set to make a string of further announcements about her plans to boost economic productivity in the run-up to the Budget.
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She said: “Britain’s economy isn’t broken. But I do know that it’s not working well enough for working people. Bills are high. Getting ahead feels tougher. You put more in, get less out. That has to change.”
“It’s only by doing this can we afford to do the things we want to do. If renewal is our mission and growth is our challenge, investment and reform are our tools. The tools to building an economy that works for you – and rewards you.”
Reeves has promised she will keep to her existing fiscal rules, which state that the Treasury will only borrow for investment and will put the overall debt pile on a downward trajectory over the next five years.
Ruth Curtice, head of the Resolution Foundation think-tank, said: “With higher gilt yields currently adding over £3bn to debt interest costs, and over £6bn of policy U-turns announced since March, the Chancellor is already on track to miss her fiscal rules. With a growth downgrade also likely, significant fiscal tightening will be needed.
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Read MoreAt the Spring Statement, an update to the public finances earlier this year which did not include tax changes, the Chancellor was given a boost by the OBR when it judged that looser planning rules would boost the economy to the tune of billions of pounds.
Allies of Reeves have expressed optimism that the watchdog will be able to go further at the Budget thanks to deregulation, trade deals and further planning reform.
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