According to an economic thinktank, Chancellor Rachel Reeves must increase taxes in autumn to fulfill his self-lending rules.
The National Institute of Economic and Social Research (NIESR) said that the government was on track to remember the goal it has set from £ 41.2bn.
This recommended “a moderate but continuous increase in taxes”, including improving the council tax system to meet the decrease.
The government said that “the best way to strengthen public finance is to increase the economy”, but the conservatives said that “tax growth always arrives for liver”.
When she became a Chancellor, Reaves set two rules for government borrowings, which is the difference between public spending and tax income.
The first rule was that day-to-day expenses with government revenue would be paid, which is mainly tax. Borrowing can only be for investment.
The second rule was that the loan should fall as part of the national income by the end of a period of five years.
Reeves has repeatedly stated that these rules are “non-pervasive”.
The Chancellor had originally promised not to pursue taxes, but recently refused to rule after that Disappointing data on economic development,
Stephen Millard, Deputy Director of Macroeconomics at NIESR, said Raves will “either increase taxes or reduce spending in the October budget or both if he is to fulfill his fiscal rules”.
NIESR argues that increasing taxes will help create a “buffer” that will assure investors about the stability of the UK.
This in turn said “can reduce the cost of lending for the government”, it said.
NIESR said that the government’s budget deficiency was due to weakening of development in the last few months, resulting in reducing tax and borrowing the High Government.
But the reverse of welfare cuts, which was originally designed to save £ 5.5bn in a year by 2030, also had an impact, it also had an impact.
After protests from within the Labor Party, the welfare deduction was reduced, and now they are expected to save less than half the original amount.
As a result, the Chancellor now faced a “trilemma”, The Thinking said, to fulfill his pledge: to fulfill his spending commitments, his manifesto promised to avoid growing taxes on working people, or to meet the borrowings.
One of these commitments would need to be abandoned, NIESR concluded, but said that the government should give priority to protect public expenditure that supports the weakest people, while also protecting public investment that supports future development.
NIESR said other priority of the government should have policies to promote development and productivity to promote standard of living in Britain.
It said that the standard of living of the poorest 10% of the population was now 10% lower than the pre-covered levels.
When Labor came to power a year ago, he said that he wanted to make the UK the fastest growing country in the G7 Group of Nations.
However, the UK faced domestic challenges with trade policy uncertainty and geopolitical risk, the thinktank.
NIESR said its analysis suggested that the economy grows 1.3% in 2025 and 1.2% in 2026, keeping the UK in the G7 between economies.
IMF recently said It was thought that Britain was the third fastest growing economy outside the so -called most advanced economies in the world. This year and next, after us and Canada.
NIESR said that inflation, the rate at which prices are rising, remains “stubborn” and would be 3.5% this year and 3% next year.
Thinktank, which is not associated with any political party or movement, did not suggest which taxes should increase or how much.
However, it has been said that the government should also consider reducing the welfare expenses by accelerating the schemes to help rely on the profit in work.
The Chancellor should also consider improving the council tax or even completely replaced with land value tax, NISR suggested.
A spokesperson of the Treasury said: “As set for change, the best way to strengthen public finance is to increase the economy – which is our attention.”
However, Chhaya Chancellor Sir Mail accused Labor of not understanding the economy.
He said, “Experts are warning that Labor’s economic mismanagement has blown a black hole in the country’s finance, which will have to be filled with more tax growth – Rhel Reeves said that she would not return to more taxes, saying she would not return to more taxes,” she said.
