Why she may have to raise UK taxes in October

Chancellor Rachel Reeves has set its plans for the UK economy in his spring statement and is on track to fulfill his self-looked rules on public finance, which he said that they are “non-circumcision”.

On its face, it looks like a good thing. So why are people saying that she can struggle to meet them and the only way to do so can be increased by increasing taxes?

This is a complex picture, but essentially five steps from where we are now to grow.

Next to the spring statement, the Chancellor was under pressure, speculating how he would be able to fulfill his self-aggravated financial rules, one of which does not have to borrow to fund the expenses of day to day.

In October, the official Economic Forecaster, the Office for Budget Responsibility (OBR), the official Economic Forecaster (OBR) said that Reeves would be able to complete the rule that is additional with £ 9.9bn.

Since then the increase in the cost of government borrowing meant that the room to spare had disappeared. Now the cuts in the statement of large welfare cuts and spring have been restored by cuts.

About £ 10bn may take too much, but it is a relatively low amount in an economy that spends £ 1 trillion per year, and arises around the same in tax.

In fact, this is the third lowest margin that a chancellor has left himself since 2010. The average headroom at that time is three times larger at £ 30bn.

“This is a small part of the risks to the approach,” OBR’s Richard Hughes told the BBC.

He said that there were many factors that could “erase” the Chancellor’s headroom, including a growing trade war, any small downgrade or increase in interest rates for the forecast of development.

Which brings us to an uncertain nature of making economic forecasting.

“All forecasts go wrong. The weather forecast also goes wrong,” is called Mr. Hughes.

In the future, especially what will happen in five years time, it is difficult to predict, and is subject to modification. For example, you can be forgiven for not predicting war or epidemic.

The Institute for Fiscal Studies (IFS), the respected think tank has already stated that “there is a good chance that economic and fiscal forecast will now deteriorate between an autumn budget”.

A case, Reeves a few hours after RiVs made his statement in Parliament, US President Donald Trump Announced new 25% tariff on cars and car parts coming to America,

Reeves admitted that the car tariff would be “bad for the UK”, but insisted that the government was in a “extensive” conversation to avoid being planted here.

According to OBR, these import taxes will have a direct impact on the total goods of about 0.2% of GDP.

Prior to Trump’s announcement, OBR warned of a growing trade war risk, and while the proposal does not actually match the Warm’s worst situation, which would see Britain retaliated, Hughes said that its elements were.

Although 0.2% is a small amount, it will still affect the economy.

And in the worst condition of OBR, 1% will be knocked out of economic growth.

Trump’s trade policies and the fact that anyone does not find out whether he will follow with his dangers, a U-turn on them, or how he will react to others, it is a way that his presidential post is making the world so uncertain at the moment.

War continues in Ukraine, despite Trump’s pledge to eliminate it.

Britain with Germany has stated that it will increase defense spending. Trump has long called NATO European members to spend more on defense, and there is a possibility that if the US makes a deal with Russia to end the war, it can leave Europe weak.

Domestic, businesses are also facing a worrying time because they brace to increase costs in April because all are all ready to go to the national insurance contribution of employers, national living wages and commercial rates.

Some firms have stated that they have stopped the decision to invest as a result, and many have warned of price hike or job cuts. If they are physical, it will knock on development.

Looking at all the above, if the Chancellor’s headroom disappears, then why would it be the matter?

Reeves has stopped its reputation to bring “iron disciplin” and provide assurance to the financial markets, unlike former Prime Minister Liz Trus to bring “iron discipline” and provide assurance to the financial markets, whose unaffected tax cuts raised markets and raise interest rates.

So if she is still to fulfill her rules and does not borrow to fund the expenses of day to day, it would mean that either more spending cuts or tax increase.

The government has already announced a major cut in the welfare bill and also plans to cut civil service and abolish several Quangos including NHS England.

But Paul Dell, as the main economist of the main UK in Capital Economics, says: “Non-defense expenses can only be harvested till now.”

Paul Johnson of IFS stated that with such a low vigali room and such an uncertain economic approach, “We can certainly expect six or seven months of speculation of what they can do or what cannot be done in the autumn.”

He himself can cause economic loss, he says.

Reeves has not ruled out tax growth, but told the BBC that “opportunity” were “risks” for the UK economy.