Thu, 30 Jan 2025

Warning higher borrowing costs may mean tax rises

The Resolution Foundation says the risk of the government breaking its own fiscal rules "remains on a knife edge".

* Higher government borrowing costs may require tax rises or spending cuts to stick to self-imposed fiscal rules.
* The Resolution Foundation report warns that the government is spending £7bn a year more on interest payments than it was at the time of the Budget.
* Chancellor Rachel Reeves has promised not to spend more day-to-day than she brings in through tax, and may need to implement higher taxes or cuts to keep this promise.
* Government borrowing costs began rising after the Budget last Autumn, and have been driven by international factors such as US and European government debt rises.
* The Resolution Foundation says that while the UK economy is not growing strongly, the risk of breaking fiscal rules "remains on a knife edge".
* Chancellor Reeves has already announced plans to cut down on "waste" and may introduce fresh tax rises or spending cuts in the coming weeks.
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