According to a Wall Street bank’s analysis, Rachel Reeves is set to increase taxes by £35 billion within five years to boost investment and public service spending.
Bank of America projects that by the 2029 to 2030 tax year, this tax hike will support a £57 billion increase in public spending. This forecast surpasses predictions by the Institute for Fiscal Studies (IFS), which suggests that Ms. Reeves would need to raise taxes by about £25 billion by 2028/29 to avoid a return to austerity measures.
Capital Economics also anticipates that the Chancellor will implement a £25 billion annual tax increase by 2029/30, alongside a £18 billion annual increase in borrowing to fund a potential £53 billion rise in public investment.
Bank of America further predicts that the Budget will include an annual borrowing increase of around £22 billion to finance these investment initiatives.
According to Bank of America, Ms. Reeves’s budgetary strategy could result in national borrowing being 0.7% higher as a percentage of GDP compared to March projections.
