UK: is Labour's budget convincing?
The new British government plans to boost public spending by taking out bigger loans and raising taxes, particularly those on companies, the wealthy and financial investors. The roughly 48 billion euros in additional tax revenues will be used to boost the economy and improve public services, Chancellor of the Exchequer Rachel Reeves explained when presenting her budget. The press reacts with a mixture of scepticism and praise.
Missed opportunity
The Times is very sceptical about Reeves' strategy:
“She chose largely to stick with the existing model, in which the productive economy is increasingly cannibalised to feed the beast of our ageing population and the unreformed services it relies upon. ... [Former chancellor of the Exchequer] George Osborne chose to visit pain upon the country via spending cuts. Reeves is doing so with large tax rises on the working population. But even with £40 billion of new tax rises and a slug of extra borrowing, the numbers are barely adding up any more. This ought to have been a budget aimed single-mindedly at changing the game by betting everything on growth.”
A good basis for further reforms
The Financial Times, on the other hand, sees the budget as ambitious and a good start:
“This marks a turning point for Britain, towards a significantly stronger role for the state in its economic model, with the tax-to-GDP ratio set to rise to a postwar high by the end of the decade. Much of the tax burden is set to fall on business. Reeves' package has begun the hard work of stabilising public services, raising capital investment and improving the fiscal rules. ... With her inaugural Budget, Reeves has begun to fix the foundations of Britain's economy from a difficult starting point.”