Economists Warn Burnham’s Giveaways Point to Autumn Tax Rises
As the government trumpets cheaper energy and bus fares, economists warn the spending points to tax rises at the Chancellor’s first Budget. June borrowing came in at £16bn, some £7.9bn below a year earlier but still ahead of official forecasts, and analysts say there is little room for extra borrowing. The Institute for Fiscal Studies has questioned how this year’s giveaways will be sustained beyond 2026.
Mr Burnham and Mr Healey have committed to the previous Chancellor’s fiscal rules while pledging to use “any flexibility” within them, a phrase that unsettled bond markets on Monday. Helen Miller of the IFS said the government had “found funding for this year, but only by reallocating savings that haven’t yet been made”, asking how the VAT cut would be paid for “next year and the year after”. Ruth Gregory of Capital Economics warned “there is limited scope for extra borrowing”. With unions pressing to unfreeze income-tax thresholds — a move costing at least £4bn — the Budget arithmetic is tightening. Watch how the sums are squared in the autumn.