A £20bn “black hole” has been revealed in the public finances, estimated to match the cuts to National Insurance made by the Conservatives pre-election.
Previous Government Left Economy in a “Mess”
Chancellor Rachel Reeves has promised to “fix the foundations” and clean up the “mess” the previous government left in the economy.
Immediate Plan to Boost Economy in Process
She has revealed an immediate plan to boost growth by welcoming private investment and unblocking infrastructure.
Tough Decisions to Be Made to Meet Mandate
Reeves has stated that economic growth for all areas of the UK is a “national mission,” and to fix it, she will make some tough decisions to deliver on the new government’s mandate.
UK Economy Should Have Grown Like the OECD Countries
Reeves explained that if the UK economy had grown at the average rate of the Organisation for Economic Cooperation and Development (OECD) countries since 2010, it would have been £140bn larger.
“No Time to Wait for Growth”
After Reeves spent a week in the Treasury, she said there was “no time to waste” and wanted to rebuild Britain.
Reeves Faces Pressure
She has been under a lot of pressure from the Unite general secretary, Sharon Graham, to change the fiscal rules so that she can borrow more to invest in infrastructure and public services.
Borrowing for Investment
Reeves said the government will only borrow for investment purposes within its fiscal rules, and the public debt should decrease annually as a percentage of the GDP by the fifth year of projections.
“Black Hole” Addressed
Reeves will be making a public speech about the UK’s finances shortly and spoke about the reports of the supposed “black hole” in the economy.
Link in Budget Deficit
The head of the independent Institute for Fiscal Studies (IFS), Paul Johnson, told Sky News that the £20bn “black hole” gap was “almost exactly the cost of the National Insurance cuts that Jeremy Hunt introduced last year.”
Reversing the Cuts Would Solve Some Issues
Johnson has said that reversing the previous cuts with National Insurance would rectify a large part of the current financial issue.
New Government Faced With Many Challenges
He believes that the new government knew the problematic situations they faced but didn’t know just how challenging the scale of problems facing the public service was, saying, “but there may have been some specifics they did not know about.”
Tax Changes Might Be Adopted
Johnson has said that if Labour isn’t going to reverse the cuts, it leaves the government with “sorts of tax changes, quite technical changes to capital gains tax- that perhaps needs to happen to be fair – and to inheritance tax.”
Hunt Said Reeves’s Claims on the Economy Are a ”Fabrication.”
Shadow Chancellor Jeremy Hunt said that Reeves’s claims about the economy being worse is “nothing but a fabrication.”
Hunt Believes Reeves Doesn’t Want to Make Difficult Decisions
Hunt has lashed back at Reeves, saying that she doesn’t want to make challenging decisions based on productivity, welfare reform, and pay.
Inevitable Tax Increases for Public
He has said that instead of facing these issues, she is preparing the public for tax increases to cover the shortfall.
Audit Found Weaknesses
The audit that found the “black hole” has shown departmental weakness and funding gaps but doesn’t reveal how much money there actually is to spend.
Tax Seems to Be the Answer
Labour has been looking at making changes to increase the government’s income, such as capital gains tax, maybe inheritance tax and rolling back some tax reliefs to make more revenue.
Reeves What Governments Never Did
Reeves has stated, “Where governments have been unwilling to make difficult decisions to deliver growth- or have waited too long to act – I will deliver. It is now a national misison. There is no time to waste.”
Reeves Is Determined to Change the Economy
Reeves seems determined to get the economy under control and predicts growth through private investments, infrastructure, and tax changes.
10 Worst Places to Live in the UK Today
Here’s a look at the 10 worst places to live in the UK, based on statistical analysis and local sentiment, to help you understand the challenges residents may face in these areas. 10 Worst Places to Live in the UK Today
“We Will Never Come to Help You” – Trump’s Hurtful Words Raise Concerns About EU Firepower
It was revealed in a conference in Brussels that former President Donald Trump said in 2020 that the US would “never help” Europe if it was attacked. Now, European nations are grouping to commit more firepower to combat Putin’s threat to democracy. “We Will Never Come to Help You” – Trump’s Hurtful Words Raise Concerns About EU Firepower
Brexit Fallout: 20 Ways the EU Is Falling Apart Without the UK
Since Brexit, the EU has been grappling with multiple crises and internal conflicts. Can the bloc hold itself together in these turbulent times? Brexit Fallout: 20 Ways the EU Is Falling Apart Without the UK
Featured Image Credit: Shutterstock / Rupert Rivett.