Particle.news
Download on the App Store
7 ARTICLES
·
yesterday

Rachel Reeves Faces Mounting Pressure as Fiscal Rules Near Breaking Point

The UK Chancellor's tax policies and narrow fiscal headroom have slowed growth, with think-tank warnings of further tax hikes or spending cuts to meet budget targets.

Britain's Chancellor of the Exchequer Rachel Reeves speaks during a discussion entitled "Debate on the Global Economy: Growth and Resilience in an Uncertain World," during the 2025 annual IMF/World Bank Spring Meetings in Washington, D.C., U.S., April 24, 2025. REUTERS/Elizabeth Frantz/File Photo
Image
Shoud chancellor Rachel Reeves bust her fiscal rules it would substantially increase the risk of further tax rises and spending cuts at this year’s autumn budget
The National Institute of Economic and Social Research has said the Government is now likely to fail its fiscal rules (Photo: Andrew Milligan/PA Wire)

Overview

  • The National Institute of Economic and Social Research (NIESR) has downgraded UK growth forecasts for 2025 to 1.2%, citing domestic fiscal policy as the primary driver of economic uncertainty.
  • Chancellor Rachel Reeves’s November tax hike on employers has contributed to slower hiring, weaker business confidence, and eroded corporation tax receipts.
  • NIESR warns that Reeves is on track to breach her £9.9 billion fiscal headroom, raising the likelihood of additional tax increases or spending cuts in the Autumn Budget.
  • The UK could face a £57 billion budget shortfall by 2029/30 if growth remains subdued, jeopardizing Reeves’s goal of balancing the budget by the end of the decade.
  • Analysts emphasize that domestic policy uncertainties, not global factors like U.S. tariffs, are the main contributors to the UK’s sluggish economic performance.