Chancellor Rachel Reeves orders a comprehensive review of Britain’s public finances, citing the gravest economic challenges since World War II and hinting at upcoming tax adjustments

Rachel Reeves, newly appointed Chancellor of the Exchequer, has wasted no time in addressing what she describes as Britain’s most severe economic conditions since the Second World War. In her inaugural address, Reeves announced a directive to Treasury officials to conduct a thorough assessment of the current state of the nation’s finances. This review, scheduled to be completed in the coming weeks, aims to provide a clear picture of the fiscal landscape and will be presented to Members of Parliament before the summer recess.

The Chancellor’s move has sparked speculation that Labour is preparing for substantial tax hikes, potentially amounting to £15 billion in the upcoming Budget—far surpassing proposals outlined in the party’s pre-election manifesto. Despite concerns, Reeves explicitly dismissed suggestions of tapping into banks’ reserves, a strategy previously advocated by former Prime Minister Gordon Brown.

Reeves emphasized the necessity of facing previously deferred decisions head-on, criticizing past administrations for prioritizing political self-interest over national economic stability. She underscored her commitment to making tough choices to stimulate economic growth, hinting at forthcoming measures to address the economic stagnation exacerbated by prolonged indecision.

Economists and analysts, including those at the Institute for Fiscal Studies (IFS) and Citi, anticipate that tax increases will be unavoidable under the new Labour government. The IFS has suggested that wealth taxes, such as inheritance and capital gains taxes, could be among the measures considered to bolster public services and stabilize the economy.

During the election campaign, Labour pledged to refrain from raising income tax, National Insurance, corporation tax, or VAT—the main revenue sources for the Treasury. Reeves reaffirmed these promises but did not rule out other forms of taxation, leaving room for adjustments in less prominent tax areas.

One proposed measure, suggested by Gordon Brown, involved taxing interest payments made by banks on reserves held at the Bank of England, potentially generating £1.3 billion in revenue. However, Reeves promptly dismissed this proposal, stating no intention to alter current practices regarding bank reserves.

Prime Minister Keir Starmer has set revitalizing economic growth as a top priority for his administration, aiming for sustained economic expansion surpassing that of other G7 nations. Reeves’ fiscal policies are expected to play a crucial role in realizing this ambition, aligning closely with Labour’s broader economic agenda.

The Guardian

Rachel Reeves, the new Chancellor of the Exchequer, delivered her first major speech, outlining the dire economic situation inherited by the Labour government. She described it as the worst since World War II, attributing the challenges to years of what she termed as chaos and economic irresponsibility under the previous administration. Reeves emphasized that decisions deferred and political self-interest had hindered economic growth, costing the UK billions in potential tax revenue. She announced plans to present an emergency assessment of the government’s financial state before the summer recess, separate from the upcoming budget.

In her address, Reeves criticized the former government’s handling of economic policies, highlighting a missed opportunity for the UK economy to grow significantly had it matched the average growth rate of OECD countries since 2010. She pointed to measures aimed at revitalizing economic foundations, including reforms to planning laws to stimulate growth and end the de facto ban on new onshore wind projects, which was welcomed by environmentalists.

Reeves’ speech set the tone for Labour’s economic strategy, framing it as a departure from previous Tory policies. She pledged transparency in assessing the fiscal challenges ahead, positioning Labour’s agenda as focused on rebuilding economic stability and fostering growth amid global uncertainties. Her statements were seen as a prelude to tougher tax and spending decisions, aiming to recalibrate economic priorities while addressing the legacy of past governance.

Sky News

In her inaugural speech as Chancellor of the Exchequer, Rachel Reeves unveiled Labour’s ambitious plans to tackle housing shortages and stimulate economic growth. Reeves announced the reinstatement of mandatory housing targets, aiming to build 1.5 million homes by the end of the parliamentary term, including affordable and council housing. This initiative, a cornerstone of Labour’s manifesto, seeks to accelerate stalled housing projects nationwide through a dedicated task force and increased support for local planning authorities.

Highlighting a shift in energy policy, Reeves also lifted the ban on onshore wind farms, marking a significant departure from the previous government’s stance. This move is part of Labour’s broader strategy to enhance renewable energy infrastructure and support sustainable development.

Addressing the economic challenges inherited from the previous administration, Reeves emphasized the need for decisive action, citing Treasury analysis that showed missed opportunities costing the UK billions in potential tax revenue. She pledged transparency in presenting a comprehensive assessment of the government’s financial situation before the summer recess, setting the stage for tougher fiscal decisions ahead.

Reeves outlined additional measures to reform the planning system, prioritize brownfield sites for development, and expedite critical infrastructure projects. These initiatives underscore Labour’s commitment to revitalize economic foundations and foster growth, positioning her tenure as Chancellor as a pivotal moment in reshaping Britain’s economic landscape.

The Telegraph

Chancellor Rachel Reeves has initiated a comprehensive review of the UK’s public finances, signaling potential tax increases in the upcoming autumn Budget. In her first address as Chancellor, Reeves emphasized that the current economic situation inherited from previous governments is the most challenging since World War II. She criticized past administrations for deferring tough decisions, which she believes have hindered economic growth and jeopardized national interests for political gain.

Reeves has directed Treasury officials to compile a detailed assessment of the fiscal landscape, aiming to present a comprehensive analysis to Parliament before the summer recess. While she ruled out proposals like taxing banks’ reserves, she hinted at forthcoming measures to address the fiscal deficit and rebuild public services, suggesting that tax rises might be unavoidable.

Economists and analysts anticipate potential tax increases of up to £15 billion in the upcoming Budget, focusing on options like wealth taxes (such as inheritance and capital gains taxes) that were not ruled out in Labour’s pre-election pledges. Despite ruling out changes to how banks’ reserves are treated, Reeves emphasized her commitment to making tough decisions necessary for economic recovery and sustained growth, aligning with Prime Minister Keir Starmer’s mission to achieve the highest sustained growth among G7 economies.

The review and its outcomes are set to define Labour’s economic strategy, marking a pivotal moment as the government navigates post-election economic challenges.