[UK] Chancellor U-turn on plans to raise income tax rates

In the UK, a source has revealed that Chancellor Rachel Reeves has no plans to raise income tax rates in this month's budget as a result of improved fiscal forecasts, Reuters reports.

The policy U-turn caused government borrowing costs to surge when news broke on November 14.

Ms Reeves is reportedly expected to need to raise tens of billions of pounds to meet her fiscal targets in November 26's annual budget. Financial markets had seen a rise in income tax as the surest way to achieve this.

In a keynote speech earlier this month, the chancellor said, "We will all have to contribute". The statement was perceived to be paving the way for the government to break its main election pledge and hike the main rate of income tax for the first time since the 1970s. 

As recently as November 17, Ms Reeves said it would not be possible to stick to this pledge without "deep cuts" to public investment.

However, the latest round of forecasts from the Office for Budget Responsibility suggested an improving fiscal outlook, according to two sources familiar with the matter. One confirmed to Reuters that the government did not plan to raise income tax in light of those latest figures.

A finance ministry spokesperson reportedly declined to comment on tax policy before Ms Reeves officially announced it in her budget.

"The chancellor will deliver a budget that takes the fair choices to build strong foundations to secure Britain's future," the spokesperson said.

Ms Reeves had expressed her commitment to making the public finances more resilient and to giving herself enough fiscal room for manoeuvre to withstand turbulence in the global economy, they added.

Source: Reuters

(Quotes via original reporting)

In the UK, a source has revealed that Chancellor Rachel Reeves has no plans to raise income tax rates in this month's budget as a result of improved fiscal forecasts, Reuters reports.

The policy U-turn caused government borrowing costs to surge when news broke on November 14.

Ms Reeves is reportedly expected to need to raise tens of billions of pounds to meet her fiscal targets in November 26's annual budget. Financial markets had seen a rise in income tax as the surest way to achieve this.

In a keynote speech earlier this month, the chancellor said, "We will all have to contribute". The statement was perceived to be paving the way for the government to break its main election pledge and hike the main rate of income tax for the first time since the 1970s. 

As recently as November 17, Ms Reeves said it would not be possible to stick to this pledge without "deep cuts" to public investment.

However, the latest round of forecasts from the Office for Budget Responsibility suggested an improving fiscal outlook, according to two sources familiar with the matter. One confirmed to Reuters that the government did not plan to raise income tax in light of those latest figures.

A finance ministry spokesperson reportedly declined to comment on tax policy before Ms Reeves officially announced it in her budget.

"The chancellor will deliver a budget that takes the fair choices to build strong foundations to secure Britain's future," the spokesperson said.

Ms Reeves had expressed her commitment to making the public finances more resilient and to giving herself enough fiscal room for manoeuvre to withstand turbulence in the global economy, they added.

Source: Reuters

(Quotes via original reporting)