Rachel Reeves is expected to introduce an additional £15 billion to £20 billion in tax increases, beyond Labour’s manifesto commitments, in her upcoming Budget next month, according to a warning from a Wall Street bank.
Goldman Sachs predicts that the Chancellor will focus on raising funds by targeting capital gains tax and inheritance tax relief in her speech on October 30.
Analysts noted that Labour’s manifesto commitments, which ruled out hikes in income tax, National Insurance, VAT, and corporation tax, have “complicated” the Treasury’s task.
Instead, Goldman Sachs suggests that Reeves may pursue a range of smaller tax-raising measures, potentially including changes to tax reliefs on pension contributions.
The bank cautioned that these measures could dampen demand in the UK economy, “partially offsetting the expansionary effects of the increase in spending.”
Analyst Sven Jari Stehn commented, “We expect fiscal policy to remain a modest drag on demand in the coming years.”
