Capital Economy, Business and Finance
If yesterday was the Conservatives’ last fiscal event before a general election, they look likely to end 14 years in government with a whimper, not a bang. But Jeremy Hunt’s Budget contained several bear traps for his likely successor – Labour’s shadow chancellor, Rachel Reeves. A non-exhaustive list of the problems she was already likely to inherit includes: a tax burden heading towards levels not seen since World War II; public debt close to 100 per cent of GDP, up from 35 per cent just over 15 years ago; and strained public services that have been starved of resources by years of austerity. After yesterday’s Budget, Reeves has the additional headache of:
- grappling with putative cuts to public spending – £800 million less a year from 2025/26 – which will disproportionately fall on unprotected departments such as the Ministry of Justice and the Department of Housing, Levelling Up and Communities (aka local councils); and
- trying to find new revenue sources after Hunt took two of Labour’s policies – extending the tax on windfall profits made by energy firms and overhauling the tax status of so-called non-doms.