\n<\/p>\n
Rachel Reeves could raise as much as \u00a345bn in taxes without breaking Labour\u2019s manifesto promises, according to a City report.<\/p>\n
Economists at the US investment bank Morgan Stanley said they expected the chancellor to use next month\u2019s budget to announce billions of pounds in tax increases to cover a potential \u00a330bn shortfall in the public finances.<\/p>\n
Amid speculation following Labour\u2019s party conference in Liverpool, it argued Reeves faced a series of tough tradeoffs between tax rises, spending cuts and limiting the political and economic fallout of her decisions.<\/p>\n
\u201cTax-wise, we can see [about] \u00a325bn of measures that don\u2019t breach the spirit of the Labour manifesto, are not outright inflationary, and can be implemented at a gradual pace,\u201d Bruna Skarica, the bank\u2019s chief UK economist, said.<\/p>\n
Economists have said that a series of welfare U-turns, elevated borrowing costs and an anticipated productivity downgrade from the Office for Budget Responsibility could leave Reeves facing a shortfall against her fiscal rules of \u00a330bn.<\/p>\n
The OBR is expected on Friday to hand its \u201cpre-measures\u201d forecasts for the UK economy and public finances to the Treasury. The assessments contained in the key document will inform the broad shape of the 26 November budget.<\/p>\n
Reeves this week used her conference speech to warn Labour figures against \u201cpeddling the idea\u201d that the government could abandon fiscal responsibility, while Keir Starmer told delegates the fiscal rules were \u201cnon-negotiable\u201d.<\/p>\n
It came after Andy Burnham, the mayor of Greater Manchester, last week suggested that Labour should not be \u201cin hock\u201d to global bond markets, amid pressure to turn around the government\u2019s dismal ratings in opinion polls.<\/p>\n
The chancellor has also faced intensive lobbying from business leaders warning her against tax rises targeted at industry after last year\u2019s autumn budget, while Labour is bound by manifesto pledges not to raise income tax, national insurance or VAT.<\/p>\n
Some senior figures in government \u2013 including Darren Jones, the chief secretary to the prime minister \u2013 appeared this week to flirt publicly with the idea of breaching the tax pledges.<\/p>\n
Morgan Stanley suggested Reeves could keep bond markets satisfied by breaking Labour\u2019s promises, because this could help raise billions of pounds while limiting the impact on the UK economy.<\/p>\n
\u201cThe most gilt market-friendly outcome is one where, perhaps in a breach of manifesto commitments, the government introduces [about] 1% of GDP in tax hikes next year,\u201d it said.<\/p>\n
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Sign up to Business Today<\/span><\/p>\n Get set for the working day \u2013 we’ll point you to all the business news and analysis you need every morning<\/p>\n Privacy Notice: <\/strong>Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.<\/span><\/p>\n after newsletter promotion<\/p>\n However, it suggested the chancellor could have scope to raise taxes elsewhere without stoking inflationary pressures. Tax increases that lead to higher consumer prices could weigh heavily on growth, while also forcing the Bank of England to maintain interest rates at higher levels.<\/p>\n In a table of possible tax hikes that it argued could raise between \u00a325bn and \u00a345bn, the investment bank said the biggest potential revenue-raising measure would be to extend the freeze of income tax thresholds by at least another year to generate between \u00a37bn and \u00a310bn.<\/p>\n Other measures included taxes on gambling, the banking industry, changes to council tax and an overhaul of pension taxation.<\/p>\n \u201cOverall, we believe the budget is likely to be less bad than feared on the balance of 1) tax increase impacts spread across sectors (and therefore generally moderate), while 2) still being extensive enough to reduce the current level of market fiscal concerns (at least tactically),\u201d Morgan Stanley said in its note to clients.<\/p>\n","protected":false},"excerpt":{"rendered":" Rachel Reeves could raise as much as \u00a345bn in taxes without breaking Labour\u2019s manifesto promises, according to a City report. Economists at the US investment bank Morgan Stanley said they expected the chancellor to use next month\u2019s budget to announce billions of pounds in tax increases to cover a potential \u00a330bn shortfall in the public<\/p>\n","protected":false},"author":1,"featured_media":25517,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48],"tags":[15408,1271,328,1529,2655,183,2656,293,6552],"class_list":{"0":"post-25516","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-politics","8":"tag-45bn","9":"tag-economic","10":"tag-policy","11":"tag-promises","12":"tag-rachel","13":"tag-raise","14":"tag-reeves","15":"tag-report","16":"tag-taxes"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/25516","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=25516"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/25516\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/25517"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=25516"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=25516"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=25516"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}