Rachel Reeves could hike taxes again after Labour’s Budget blunders | Politics | News

Shadow Chancellor Mel Stride has warned Brits face more tax hikes next year after it was revealed two-thirds of Chancellor Rachel Reeves’ £9.9 billion borrowing buffer has been wiped out already.

Rachel Reeves has little headroom left as her spending rules set out just two months ago are at risk of being broken.

Mr Stride claims “Labour’s assault on jobs and business confidence” has led to a surge in borrowing costs which has reignited inflation fears.

Capital Economics have predicted that Ms Reeves’ buffer has been sliced to just £3.5 billion, suggesting that diving any further into this figure could see her raise taxes or cut spending as soon as March.

The Chancellor allocated herself such a small budget in the hope that day-to-day spending would be brought back into balance within three years.

However, Mr Stride has warned that further tax increases are on the horizon if economic policy is not realigned with growth.

He told the Daily Express: “Labour’s budget and talking down of the economy are leaving us in an increasingly vulnerable position.

“Shrinking fiscal headroom is a direct result of Labour’s assault on jobs and business confidence. Under Labour we are growing increasingly vulnerable to potential economic shocks such as the possibility of President Trump bringing in tariffs.

“Rachel Reeves needs to think again fast. Economic policy must now be promptly realigned with growth not decline.

“As pressure on her fiscal headroom increases there is a growing and real risk that the Chancellor may have to come back for further tax increases.”

The government itself has refused to rule out raising taxes in the Spring Budget in order to meet Ms Reeves’ harsh borrowing limit as they insist a balance is “non-negotiable”.

Shadow Chancellor of the Duchy of Lancaster Alex Burghart echoes the sentiment of Labour’s failed finances, adding that Sir Keir Starmer could sack Rachel Reeves in order to “reset”.

He told the Express: “Labour’s Budget has failed – there’s a real danger they’ll hike taxes again. The big question for 2025 is whether the PM will try to reset by ditching his Chancellor.

“But this Budget is as much on him as it is her – it’s the bad choices he signed off that are causing the economy to tank.”

The Treasury has been approached for comment.