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Rachel Reeves will announce Labour’s first Budget since coming into power on 30 October, leading one of the most anticipated fiscal events in over two decades.
Ahead of her announcement, the chancellor has welcomed an upgrade to the UK’s economic forecasts from the International Monetary Fund (IMF). The financial agency even said the country’s battle against inflation has “largely been won.”
The country’s GDP is now predicted to grow by 1.1 per cent in 2024 – a major uplift from the 0.7 per cent forecast in July.
Ms Reeves said the new forecast was “welcome” but that there is “more work to do.” She added: “The Budget next week will be about fixing the foundations to deliver change, so we can protect working people, fix the NHS and rebuild Britain.”
New figures from the ONS also show that government borrowing rose to £16.6 billion last month marking the third highest September borrowing since records began, according to the Office for National Statistics (ONS).
This has brought borrowing in the year to date to £79.6 billion – £6.7 billion more than forecast by the Office for Budget Responsibility. The ONS says public sector pay rises contributed to the unexpected rise.
We’ll be bringing you all the latest updates ahead of the big event on 30 October here, on The Independent’s liveblog.
Key Points
- Streeting refuses to rule out income tax threshold freeze
- When is the 2024 Budget and what might be in it?
- Government will keep manifesto pledges, says Starmer
Borrowing figures show “scale of public finances challenges” says expert
Government spending so far this financial year was £11.5 billion more than forecast by the OBR, points out The Resolution Foundation, which tallies with Rachel Reeves’ claim of a £22 billion “black hole” in the public finances.
The foundation’s senior economist Cara Pacitti said: “Six months into the financial year, Britain is borrowing £6.7 billion more than expected at the time of the Budget in March.
“This reflects central government spending which is £11.5 billion higher than anticipated, largely due to public sector pay rises and higher running costs.
“Today’s data highlights the scale of the public finances challenges facing the Chancellor as she grapples with overspending today, the need to avoid austerity in the future, and having to fund extra public service spending through tax rises.”
Albert Toth22 October 2024 15:00 1729602309GDP due to grow in 2024 in major uplift, says IMF
The IMF has said UK gross domestic product (GDP) is due to grow by 1.1 per cent in 2024 - a major uplift from the 0.7 per cent growth forecast from July.
The UK economy is then expected to grow by 1.5 per cent in 2025, with the IMF maintaining its prediction from earlier in the year.
The IMF report also found that UK inflation for 2024 is set to be slightly higher than expected at 2.6 per cent, having previously pointed towards a 2.5 per cent reading.
It likewise slightly increased its inflation projection for 2025 to 2.1per cent from 2per cent in its previous outlook.
Unemployment is also set to be slightly worse than previously expected by the IMF, according to the latest report.
It said the UK unemployment rate is set to have been 4.3per cent for 2024 as a whole, compared with a previous 4.2per cent estimate.
Archie Mitchell22 October 2024 14:05 1729601709Rachel Reeves boost as battle against inflation has “been won”
Rachel Reeves has welcomed an upgrade to the UK’s economic growth forecasts from the International Monetary Fund (IMF) as it said Britain’s battle against inflation has “largely been won”.
The chancellor stressed that there is “more work to do”, but added “it is welcome that the IMF have upgraded our growth forecast for this year”.
Ahead of her first financial statement as chancellor on Wednesday, Ms Reeves said: “The Budget next week will be about fixing the foundations to deliver change, so we can protect working people, fix the NHS and rebuild Britain.”
Archie Mitchell22 October 2024 13:55 1729598434Could capital gains tax be reformed at the Budget?
Capital Gains Tax (CGT) is paid on the profit made when an asset which has increased in value is sold. It is applied to things like the sale of personal possessions worth more than £6,000 (apart from a car), property that’s not the seller’s main home, shares and business assets.
It is charged at 10 or 18 percent for basic rate taxpayers, and 20 or 24 for higher or additional rate earners. There is a tax-free allowance of £3,000.
There are several ways CGT could be changed. In the run-up to the election, the Lib Dems and Greens both said they would rethink the tax bands to be more similar to income tax, raising an estimated £5.2bn a year.
Albert Toth22 October 2024 13:00 1729594834Tax on high earners ruled out as Rachel Reeves looks to plug £40bn Budget black hole
Sir Keir Starmer’s government was hit by another day of Budget confusion after Labour was bounced into conceding that individuals earning above £100,000 are still “working people”.
On a day when the prime minister had hoped to get a grip on the political agenda with the launch of a major consultation over the future of the NHS, Sir Keir faced another series of rows and speculation over whether Rachel Reeves was planning further taxes on the rich.
Tax on high earners ruled out as Rachel Reeves looks to plug £40bn Budget black hole
No 10 forced into astonishing admission that high earners can also be protected by its pledge not to raise national insurance for working people – after minister refused six times to confirm if that included employees on six-figure salaries
David Maddox22 October 2024 12:00 1729590053Borrowing figures prove need for “tough decisions” says Treasury official
Treasury Chief Secretary Darren Jones said the state of the public finances meant there would be “difficult decisions” in the October 30 Budget.
He said: “We have inherited a £22 billion black hole in the country’s public finances, including no plan to fund pay deals for millions of public sector workers.
“Strikes cost at least £3 billion last year, so it was the right thing to do to end those damaging disputes.
“Resolving this black hole at the Budget next week will require difficult decisions to fix the foundations of our economy and begin delivering on the promise of change.”
Albert Toth22 October 2024 10:40 1729580400Could the government tax pension savings?
Pension tax relief is a reduction of the amount of tax paid on private pensions. It helps workers save for retirement by boosting their pension pots.
The amount of tax relief a person is granted is based on their income tax. It will effectively cancel out tax on pension contributions up to a maximum of £60,000.
After this, contributions will be taxed at either 20, 40, or 45 per cent, depending on which income tax rate the worker falls into.
However, the chancellor is thought to be considering a flat 30 per cent pension tax relief rate. This would mean that higher earners would effectively pay 10 per cent in tax, while those on the additional rate would pay 15.
The measure would raise around £3 billion a year, with 7 million earners paying more tax. But it would be better news for basic rate earners, who would actually begin to receive a 10 per cent boost to their pension contributions.
Evaluating the idea last year, the IFS said it would “redistribute the burden of taxation from the bottom 80 per cent to the top 20 per cent of earners.”
Jabed Ahmed22 October 2024 08:00 1729573200Calls for budget to fund Iron Dome-style missile defence system in UK
The UK needs its own version of Israel’s Iron Dome missile defence system to protect it from Russian aggression, former ministers have said.
Former defence secretary Penny Mordaunt told The I: “This is a significant UK capability gap we must plug at the earliest opportunity. The forthcoming Budget must enable early work to be done on the alliance’s key needs and let the US and other partners know we mean business.”
Jabed Ahmed22 October 2024 06:00 1729566000Fact check: Would raising employer national insurance be a ‘tax on working people’?
Speculation has mounted in the subsequent months, with an increase in employer NICs now looking likely. The measure has caused strong political debate, focused on whether it would break Labour’s manifesto pledge to not raise taxes on “working people.”
Ministers and Treasury officials have indicated the government’s position is that the measure would not break their manifesto pledge. Labour has not confirmed that an employer NIC hike will be included in the Budget, but has refused to rule the measure out.
Meanwhile, Institute for Fiscal Studies director Paul Johnson has argued it would be a “straightforward breach.”
The tax expert adds that in the extreme case that an increase of one pence per pound in employer NICs was passed on to employees in the form of lower wages, the measure would only net £4.5 billion a year. He adds that the end figure would probably be a little higher than this, but much less than a previous HMRC estimate of £8.5 billion.
Jabed Ahmed22 October 2024 04:00 1729558800Martin Lewis sends warning over Buy Now Pay Later crackdown
Martin Lewis has issued a warning over a new crackdown on buy now, pay later products.
The money expert has cautioned consumers it is a case of buy now, get protected later.
Ministers have announced that millions of shoppers are to be protected by new rules for BNPL, as they are known.
Mr Lewis welcomed the change saying: "Buy Now, Pay Later is now ubiquitous at online checkouts, so the fact it’s never been regulated is a travesty I and others have long campaigned on.
“The last chancellor promised to regulate, then the tumbleweed rolled as he went silent, so I am delighted the new government has quickly restarted the process.”
Jabed Ahmed22 October 2024 02:00 Newer1 / 5OlderDisclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
