Tax rises now ‘a good bet’ this year as Rachel Reeves risks economic ‘doom loop’ after grim budget, experts warn

PAINFUL taxation hikes astatine the adjacent Budget are a “good bet” arsenic Britain astatine hazard of an economical “doom loop”, experts say.

Rachel Reeves volition beryllium nether unit to rise taxes oregon chopped spending aft borrowing deed £18 cardinal which was the highest December fig for 4 years.

Most experts predicted would beryllium £14 cardinal but was chiefly driven by soaring involvement payments, spending connected nationalist services and benefits payments.

The Chancellor is facing unit arsenic maturation is sluggish and the government’s fig 1 ngo is to turn the economy.

But expert Elliott Jordan-Doak, from Pantheon Macroeconomics said: “The chancellor is already nether unit to clarify however the authorities volition conscionable its new fiscal rules.

“We expect the authorities to outline spending reductions - backloaded towards the extremity of the forecast twelvemonth - astatine the adjacent fiscal lawsuit successful March.

“Further taxation increases astatine the adjacent fund successful October, is besides a bully bet.”

Alex Kerr, adept astatine Capital Economics, added that the Chancellor “may request to raise taxes and/or chopped spending successful the adjacent fiscal connection connected 26 March”.

Meanwhile, ex-Bank of England main economist said the UK is astatine hazard of entering an economical “doom loop” if spending continues to beryllium cut.

He says the Office of Budget Responsibility volition present its forecast astatine the extremity of March which could trigger little concern and spending.

Speaking to Sky News’ Politics Hub with Sophy Ridge, helium said: “It would beryllium profoundly counterproductive to some maturation and to the fiscal presumption if that led to a cutting backmost connected concern and so successful spending much generally.

“Then I deliberation you truly are into a doomed loop betwixt indebtedness and growth. And that’s a concern to debar astatine each costs.”

He was besides much upbeat for the 2nd fractional of the year.

He said: “I deliberation erstwhile we get to the 2nd fractional of the year, the underlying fiscal representation whitethorn look somewhat amended arsenic mightiness beryllium the underlying maturation picture.”