Share this post:

She can’t do right for doing wrong, it seems. No sooner had Rachel Reeves indicated that she will not increase income taxes than economists hiked interest rates, adding a fortune to the Treasury’s costs.

Here’s the BBC:

“Chancellor Rachel Reeves has decided against raising income tax rates at the Budget later this month… partly due to better-than-expected economic forecasts.

“Instead of raising income tax rates, the chancellor could opt to freeze or lower income tax thresholds, the salary levels at which the various rates kick in.”

Here, also, is the BBC:

“UK government borrowing costs have risen sharply in reaction to news that the chancellor has decided against increasing income tax rates in the upcoming Budget.

“The interest rate on 10-year government bonds, known as the yield, jumped from 4.44% to 4.56% in early trading, indicating the cost to government if it chose to borrow over this length of time.

“The spike in yields reflected concern in the financial markets about how the government would meet its spending and borrowing commitments without an income tax rise.”

So Reeves decided she doesn’t have to raise income tax because of a better economic forecast – and then the economists shafted her by raising interest rates.

That seems extremely unfair – ‘damned if you do – damned if you don’t’.

Let’s look at what happened, to see if it’s more reasonable than it seems.

To read the rest, head over to The Whip Line.

A subscription unlocks all my analysis and helps keep independent UK political journalism going.

Share this post: