Reeves Faces £50 Billion Black Hole as Tax Pressure Mounts
Rachel Reeves must raise taxes immediately to plug a fresh £50 billion hole in the public finances, according to the National Institute of Economic and Social Research, one of Britain’s most respected economics organisations. The Telegraph has more.
Slowing economic growth, a weak jobs market and the cost of Labour’s about-turns on welfare spending have combined to plunge government finances deeper into the red, the National Institute of Economic and Social Research (Niesr) warned.
The Chancellor is now on course to miss her borrowing targets by £41.2 billion, the think tank predicted. If she wants to restore the £9.9 billion of headroom maintained since last year’s Budget, Ms Reeves must therefore raise taxes or cut spending by £51.1 billion.
David Aikman, director of Niesr, said it was increasingly difficult for the Chancellor to avoid raising taxes on working people if she wanted to maintain her fiscal rules and stick to spending promises.
The forecasts will worry Downing Street given Niesr’s stature. It is Britain’s oldest independent economic think tank and was co-founded by John Maynard Keynes, the British economist who has helped to shape modern Left-wing thought.
Niesr’s economic model is highly respected globally and used by organisations such as the Treasury and the International Monetary Fund. Its president, Sir Paul Tucker, is the former deputy governor of the Bank of England.
The warning comes just a year after Rachel Reeves attacked the Conservatives for leaving an alleged £22 billion black hole in the public finances. The Chancellor used this to justify what she claimed was a “once in a generation” Budget that saw her mount a £40bn tax raid.
Ms Reeves claimed the record-breaking tax increase was necessary to fix public finances. However, the measures are widely thought to have backfired – with business confidence plummeting, unemployment jumping and inflation once again rising.
Mel Stride, the Shadow Chancellor, claimed the black hole was a result of Labour’s “economic mismanagement”.
Niesr’s dire forecast suggests the upcoming Budget could eclipse last year’s – despite the Chancellor repeatedly promising not to repeat tax rises on that scale.
Attempts to cut government spending have so far met with significant backbench rebellions, suggesting Ms Reeves will struggle to deliver significant savings this way.
Stephen Millard, the think tank’s Deputy Director, added that any move to amend borrowing rules would risk “another Liz Truss moment”. Ms Reeves has insisted her fiscal rules are “iron clad”.
As a result, tax increases appear the most likely way to plug the Budget black hole.
Mr Aikman said the Chancellor “faces an impossible trilemma: it is becoming increasingly difficult to see how the Government meets its fiscal targets, sticks to spending promises, and avoids tax increases on working people. Something will have to give.”
The scale of tax rises required would be equivalent to a 5p increase to the basic and higher rates of income tax, Mr Millard said.
“These are the really hard decisions the Chancellor is going to have to make, if she is going to raise the £50bn,” he said. “Fiddling at the edges is not going to do the job.”
Worth reading in full.
On X, Toby notes that “Government ministers rarely lost an opportunity to refer to the ‘£22 billion black hole’. Lord Livermore, a Treasury Minister, used the phrase 60 times at the dispatch box in the last 12 months. I wonder if he regrets that now?”
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Perhaps giving in to the unions right at the start of Labour misrule was not the best idea. Don’t worry though, the grown ups are back in charge. Twunts!
A tax rise of that size will fuck what’s left of the economy immediately.
Economic suicide.
“Things collapse slowly, then all at once”.
I will be amazed if this excuse for a Govt makes it to Christmas. Unemployment and inflation will definitely continue to rise and the black hole will get bigger. She could of course send Milliband ‘on his way’ and make some spending cuts to PiP and Motability ( but she won’t). It’s highly likely the Markets will lose patience and refuse to lend at current interest rate.
When they jump, the Govt will have nowhere to go and no-one to blame. They will then fold.
The country will be “folded” by this government and I have been predicting the collapse, economically and financially since 2020. Our economic destruction was always part of the globalists planning. A seismic financial crash will hit this country before the end of 2026 at which point we will be sold off to the money men. At that point it may well be every man for himself.
The claims that
1) Unemployment is a problem.
2) Disability benefits keeping people out of the job market is a problem.
contradict each other. If there’s already not enough work for all people who think they’re prefectly capable of working, forcing people into the job market who believe they’re not is not going to improve anything.
Having ones cake and eating it has always been the aim of the fiscally handicapped personnel in the Labour party, followed swiftly by running out of other peoples money then leaving office. No more boom and bust, said GB as the country went to the dogs, with not a penny left when they left..
Here’s ‘our’ Rachel singing her favourite song: “How I crashed the economy” https://www.youtube.com/watch?v=cVnLVD4bFFY In these grim times, I hope this makes you smile just a little.
The repo market, which faced significant turmoil in 2019, experienced a remarkable revival during the COVID-19 pandemic due to massive quantitative easing (QE) measures implemented by central banks. These interventions provided essential liquidity and stability, allowing financial institutions to navigate the initial shocks of the pandemic effectively. However, as we move into 2025, the repo market is once again under pressure.
The resurgence of problems can be attributed to several factors: the colossal increase in government debt incurred during COVID-19 mitigation efforts, a struggling economy characterized by inflationary pressures, and looming threats of higher taxation. This combination creates a precarious environment where the repo market may face renewed volatility, reminiscent of the challenges seen in 2019. The interplay of these economic conditions raises concerns about the sustainability of the financial system and the potential for liquidity crises if confidence falters.
IOW – we’re all doomed!
“The resurgence of problems can be attributed to several factors: the colossal increase in government debt incurred during COVID-19 mitigation efforts…” You are missing the point. The “mitigation efforts” were not required. This country had epidemic planning written and ready to go except that all Western governments were under instructions to max out the credit cards and “spend, spend, spend.” We have to accept that the C1984 was simply stage one of the economic and industrial destruction intended for our countries. What is occurring now was always planned for. Rachel Thieves knew this from the time she took office. Her upcoming budget will be a tour de force of destructive measures absolutely guaranteed to bring this country crashing down. The exorbitant public sector pay rises could never be justified by anyone witn a vestige of intelligence but they went through and thereby exacerbated our economic woes but we are expected to believe Rachel from Accounts is simply stupid; I don’t doubt she is but there are enough people around her to point out her stupidity and so the only conclusion is that this has been planned for. Similarly with both legal and illegal immigration, we could stop both overnight but… Read more »
At no point was I in any doubt, from day one, that the CV19 event was a total fake, from beginning to end.
Many interests were advanced under the guise of CV19, a key one being the excuse for pouring money into the economy but in doing so preventing spending from causing runaway consumer inflation (by virtue of lockdowns) and instead diverting spending of the CV19/QE cash into asset inflation (cars, property but greatly stock/financial markets).
In politics, nothing happens by accident. If it happens, you can bet it was planned that way.
Franklin D. Roosevelt
The aim was to bankrupt the government so when interest rates have to rise, to quell inflation that has to arise as a result of all this ‘new’ money, the state cannot afford to service even the interest on its debt and so its creditors are entitled to assume control of the asset.
https://x.com/EUbrainwashing/status/1620210057408557057
Bankrupt the country, surely? The government has no money of its own, only ours… I agree it feels like a setup to bring it all down
Do we think Reeves, Miliband, Kneel & Co. agree with the following? “Isn’t the only hope for the planet that the industrialized civilizations collapse? Isn’t it our responsibility to bring that about?” Maurice Strong Billionaire elitist, primary power behind UN throne “The concept of national sovereignty has been immutable, indeed a sacred principle of international relations. It is a principle which will yield only slowly and reluctantly to the new imperatives of global environmental cooperation.” UN’s Commission on Global Governance “The objective, clearly enunciated by the leaders of UNCED, is to bring about a change in the present system of independent nations. The future is to be World Government with central planning by the United Nations. Fear of environmental crises – whether real or not – is expected to lead to – compliance” Dixy Lee Ray Former liberal Democrat governor of State of Washington, U.S “It is the fight for a new economy, a new energy system, a new democracy, a new relationship to the planet and to each other, for land, water, and food sovereignty, for Indigenous rights, for human rights and dignity for all people. When climate justice wins we win the world that we want.” Naomi Klein… Read more »
I think the members of our illustrious government just see which way the wind blows and go with it. They are psychopaths. They only care about themselves and dream they are insiders of the big club. What they don’t realise is the ‘big club’ is for dupes and is run by a very small ‘club’ that will get rid of the trained psychopaths as quickly as they plan to cull everyone else, just the same. The Predatory ruling class have no inhibitions other that getting caught and reaping bad karma.
To claim Fiscal Headroom is barmy. The level of borrowing is no longer sustainable.
If I recall correctly, annual interest is about £100bn.
In June around 80% of the amount borrowed went on servicing the existing debt.
It’s equivalent to using one credit card to pay off another. Absolutely nuts. We’re surely heading for a reckoning.
We are, but some people will still say ‘you can’t manage an economy like a household budget’. Perhaps not a 100% no, but some prudence like ‘spending less than we earn’ and ‘saving for a rainy day’ (ie Norwegian sovereign fund) would be nice… at the moment it’s just tax, spend, borrow and print some more, rinse and repeat – crazy
If it moves, tax it.
If it keeps moving, regulate it.
When it stops moving, subsidise it.
Lefty economics in a nutshell.
Morons.
And tax you on what you earn, tax you if you spend it, tax you if you save it, tax what you have, tax when you use it, tax when you sell it, tax you when you die.
Indeed.
The mystery is that a majority of the electorate seem to think that’s OK.
The majority of the electorate are in for extremely rude awakenings when the poo hits the fan. Shortly.
Indeed HP.
We need a 180 degree turn in public policy.
But NOT I’m tempted to say, before the hard-of-thinking electorate have had their noses rubbed mercilessly in economic collapse. There must be no doubt left that big state borrow, tax and spend is a disaster.
👍👍👍
We will need a bigger fan – Perhaps more than 1.
I too find it mystifying. I think it is the brainwashing – we all need to pay our Fair Share™️ of taxes for the public services we enjoy (then violin section takes over) and to help the… sniff… poor.
But mostly I think a lot of people think, or want to think, they get out more than they put in.
But now it’s beginning to look more and more like the Ponzi scam it is, people are wising up.
You’re really highlighting an inherent problem with the system of parliamentary goverment. Originally, government was the business of kings who had to come to terms with a parliament representing the people whenever they needed more money for “government” than was already available to them. Parliament thus acted as a brake on government spending. But when parliament became government, this brake ceased to function. Parliament still has the right to create any kind of tax its members agree upon but since parliament nowadays funds its own government, there’s no reason why it should be particularly parsimonious with other people’s money regarding this.
It all began at the end of WW2. From that time the OxBridge Civil Service have been running this country as a command economy. In addition many of the academics that come out of either Oxford or Cambridge hate their own country and it’s history. Parliament has been hi-jacked for some time.
In the wartime coalition, Labour was assigned running the Home economy, which being wartime could be run as a command economy.
To Socialist Labour this was all their Christmases coming at once. Since it “worked” during the war years it was assumed it would work in peacetime, which is why they nationalised the economy after 1945 when the won the GE.
The power that Socialism and its evil twin Fascism gives to those in government – elevation of the State over the people, central economic planning and control – is attractive to intellectual elites who believe they uniquely know what should be done and how, rather than leaving it to serendipity in a free society and free market economy.
It is the case that so-called Conservative Governments didn’t nothing to reverse this which bears out your remarks.
Yes. Initially there were three parts: Executive, Parliament, People.
When the monarchy was abolished, then the Act of Settlement moved power from King to Parliament, the game-keeper became poacher too – conflict of interests and nothing to protect the People from Parliament… elections being a ritual in a rigged system to perpetuate a ruling elite which cannot be removed.
However. Magna Carta removed the Right if the King to tax without consent. Parliament has no Right to tax by consent but that fact had bern buried deep for obvious reasons.
Raise taxes or cut spending
…
Raise taxes…
…or
…cut spending
Hmmm. This one is tricky. Rachel will doubtless choose one of them, and I simply can’t imagine which.
Or… print some more money, and let others worry about the inflation. In fact, government wants more inflation to ‘inflate’ away the bonds its sold
If you are in debt and you keep spending more and more, then you have to borrow more and more or rob a bank (aka taxpayers).
The sane thing to do is stop spending.
But that is not in the Socialist’s nature, too many cronies and supporters to reward and bribe.
Rachel Reeves is the UK’s Elizabeth Holmes, only a lot worse, because she is burning taxpayers’ money, as opposed to the money of gullible, rich, impressionable, white male investors who worry they’re being left behind.
I think there’s a competition in Labour between Mad Ed Miliband, Robber Reeves and flame-haired Rubinesque stunner Angie as to who can do the most damage to the British economy. I wonder who will win?
“There’s only one way to find out; FIIIIIGHT!”
I suspect WEF bonuses are at stake.
They are definitely all planning their longer term post political careers, you are bang on
Strange.
Never a mention by HMG of the 350 -500 billion they and their partners in crime spaffed up the wall enabling covid clown world.
Maybe the real rulers of the western world will let that go. Lol.
“Never a lender nor a borrower be”. One thing Islam got right. And arguably Christianity certainly as regards excessive interest rates.
The UK owes in interest alone, more than a years worth of its GDP.
It’s insane.
Maybe we should do what Hitler did.
Many of us have over the years likened running a country to running a household and been slated for having the nerve to posit such a notion. Except it’s true. If we haven’t got it we can’t spend it and believing that printing pound notes is a solution is economic illiteracy. Unfortunately, currently the illiteracy is intentional.
That attitude wouldn’t sit well with The Bankers.
Sadly for us 20% they know human nature only too well.
We’re the same 20% that gave 2 fingers to clown world, and the lie that it’s all Putin’s fault.
Our so called leaders have f++++d up big style since allowing Fiat currency so only hatred of Russia can save them.
Nevertheless, it’s a mystery to me how the USA with $36+trillion debt can claim a booming economy.
Back to our Rachel, the only thing she has to do is to repeat what Labour did in 1976 – seek $50bn bailout from the IMF (it was only $3.9bn then). The economic environment is identical. This government’s fiscal policy (like Jim Callaghan’s government) has lost the trust of financial markets.
Ms R wants to play ‘Laffer loss bingo’ with a bigger tax rate…….
So in less than a year, they’ve taken the £22 billion black hole and more than doubled it.
I didn’t realise they were playing double or quits.
It usually takes Labour at least one full term to completely wreck the economy. Rachel from Complaints has done it in record time.
Has anyone else noticed the value of the British Pound. I think I am correct in saying it is lower than during Liz Truss reign.
Value of Pound Sterling against…. what?
Good question. Against the Euro.
Not against the USD, but it has been a turbulent time for the USD value recently.
Not sure if it is a good benchmark, but I remember the press being very vocal about the value of the GBP and I don’t hear anything now.
Given how much extra is, and has been issued, you can be sure it’s worth less…
So the only solution is to increase taxes, not…err…reduce spending?
Maybe Rachel could sell the whole government to a third-world country ?
Think how well we would all do then !
Could we just ask the US to invade us?