Institute for Fiscal Studies Warns Reeves Will Need to Hike Taxes Again in Autumn – Guido Fawkes

Institute for Fiscal Studies Warns Reeves Will Need to Hike Taxes Again in Autumn

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Reeves’ spring statement has landed like a lead balloon – the left furious over the cuts to disability benefits, while others are calling her deluded after the OBR slashed its growth forecast in half. Now, latest analysis from the economists at the Institute for Fiscal Studies warn if Reeves wants to stick to her fiscal rules, she’ll have to come back for more in the Autumn budget. Months of speculation over tax hikes in the Autumn inbound…

IFS boss Paul Johnson said:

“There is a good chance that economic and fiscal forecasts will deteriorate significantly between now and an autumn Budget. If so, she will need to come back for more, which will likely mean raising taxes even further. That risks months of speculation over what those tax rises might be – a raid on pensions, a wealth tax on the richest, another hike to capital gains tax?”

The IFS analysis points out:

• The downgrade to borrowing forecasts is almost perfectly offset by a £9.9 billion trimming of spending plans to restore ‘headroom’. Though if Reeves sticks to her plan of freezing fuel duties, half of that headroom will disappear. Leaving a £4.95 billion hole…
• Debt interest is set to hit £111 billion next year, £64 billion more than forecast just three years ago in March 2022.
• Both tax and spending will be over 4% GDP higher by the end of the period. The IfS concludes the size of the state will remain well above pre-pandemic levels…
• If productivity doesn’t bounce back, it’s going to be more bad news. According to a pessimistic scenario from the OBR, there could be a deficit of almost £50 billion. The economists point out the OBR’s productivity growth forecasts have often been naively optimistic…
• Borrowing will be almost £50 billion higher over the next five years than expected last autumn.

Now the IFS is warning that Rachel Reeves will need to introduce further tax hikes – something she hasn’t ruled out – in the autumn if she’s to meet her fiscal targets. As Guido pointed out last week, the incoming IFS chief, Helen Miller, is no stranger to calling for tax raids. She’s already called for a massive wealth tax and believes capital gains tax should be aligned with income tax rates. Expect plenty more sombre conclusion that higher taxes will be required from the left-wing economists when Miller takes charge…