The Confederation of British Industry (CBI) has warned that Britain’s economic growth is set to slow due to Rachel Reeves’s tax policies, coupled with increased public spending that is expected to keep inflation and interest rates elevated for longer.
The CBI revised its growth forecasts downward for both this year and next, attributing the changes to the Chancellor’s measures, which it says are adding strain on households and businesses. Following the significant impact of the tax increases, the lobby group now expects inflation to remain above the Bank of England’s 2% target until at least 2026.
Michael Summersgill, CEO of investment platform AJ Bell, voiced concerns that further tax hikes might follow. Speaking about the recent Budget, he remarked:
“The narrative ahead of this Budget didn’t align with the policies ultimately introduced. Do I think there’s a risk of further tax increases during this Parliament? Yes, I do. The October Budget wasn’t pro-growth or pro-investment, which is worrying. While Labour had shown some promise earlier in their government tenure, the Budget was heavily focused on tax-raising measures, with some clumsy proposals that raised significant concerns.”
The CBI now projects the UK economy will grow by 0.9% in 2024 and 1.6% in 2025, down from its previous June forecast of 1.0% and 1.9%, respectively.
