Rachel Reeves lays groundwork for tax rises

In a candid speech about the upcoming budget, Chancellor Rachel Reeves has signaled that tax rises are on the horizon. Reeves emphasized the need for tough choices and framed the tax increases as necessary for the country’s future.

Reeves refused to rule out breaking her manifesto pledge on tax, stating that she must face the world ‘as it is’. She highlighted the actions of previous governments as the reason behind the forthcoming tax rises.

The Chancellor’s speech focused on creating conditions for interest rate cuts to support economic growth and improve the cost of living. Reeves stressed the importance of fairness and opportunity in the budget, but hinted at a breach of the previous manifesto pledge on tax.

Market anticipation and impact

Investors are anticipating tax rises in the upcoming budget, leading to a decline in the pound’s value. The markets are also experiencing AI valuation jitters, as Reeves prepares to lay the groundwork for tax increases.

With the OBR downgrade to productivity forecasts affecting tax and spending plans, Reeves blamed long-term policy failures for the UK’s weak performance. She aims to prepare voters and markets for the possible tax rises in the budget.