Tax raid alert: Reeves ‘will feel need’ to raise MORE taxes amid recession fears

Chancellor Rachel Reeves “will feel the need” to implement further tax rises next autumn, a leading economist has warned, following disappointing economic figures.Paul Johnson, director of the Institute for Fiscal Studies (IFS), issued the warning after revised data showed the UK economy had stagnated in the third quarter of 2024.Economists are sounding the alarm over a potential recession in 2025, which takes place when a country experiences two consecutive quarters of negative economic growth.The Chancellor, who already introduced £40billion in tax increases during her October Budget, could need to return for “yet more money” if economic growth fails to improve.In her Autumn fiscal statement, Reeves raised the National Insurance rate for employers to 15 per cent and brought pensions into the inheritance tax (IHT) regime, among other changes.Do you have a money story you’d like to share? Get in touch by emailing [email protected] latest warning from the IFS comes despite Reeves’ recent pledge to business leaders that she would not introduce additional taxes. The Office for National Statistics (ONS) has revised down its initial estimate of 0.1 per cent growth for Quarter 3 of 2024, showing the economy actually recorded zero growth during this period.The figures cover July to September 2024, following Labour’s General Election victory in July. Liz McKeown, ONS Director of Economic Statistics, explained: “The economy was weaker in the second and third quarters of this year than our initial estimates suggested, with bars and restaurants, legal firms and advertising, in particular, performing less well.”The Bank of England has also downgraded its growth forecasts, while business confidence has fallen to levels not seen since the mini-budget crisis. Speaking to Times Radio, Paul Johnson said: “It’s not impossible that the Chancellor will feel she needs to come back for yet more money next autumn if the economy doesn’t pick up.”He added: “Then, again, she’s stuck in this really difficult place – you increase taxes in order to fund public services adequately or because there’s no growth, you don’t have the money you need for the public services and you disappoint people on that front.”The IFS director described the current economic situation as “all a bit miserable,” noting “zero for the third quarter, and it’s looking like zero for the final quarter as well, tax increases in the Budget, a general sense of gloom over the economy”.In October, Reeves unveiled a significant package of tax increases totalling £40billion, including her £25billion raid on employers’ National Insurance contributions.The measures included changes to inheritance tax, limiting tax relief for farms to £1million, with assets above that threshold being subject to taxation. Last month, the Chancellor told business leaders she would not borrow more or raise additional taxes.However, she has since repeatedly declined to reiterate this pledge, leading some experts to question whether it can be maintained. Business leaders have warned that Labour’s policies are creating “a hostile climate for aspiration, investment, and growth” in the UK.
The latest ONS figures revealed that household disposable income per head showed no growth during the third quarter, following a 1.4 per cent increase in Quarter 2. The household saving ratio slightly decreased to 10.1 per cent in Q3, down from 10.3 per cent in the previous quarter.With its current performance, the UK placed it at the bottom of the G7 economies, jointly with Italy for the third quarter. Per capita, the economy contracted by 0.2 per cent in the third quarter, having shown growth in the first two quarters of 2024.LATEST DEVELOPMENTS:’Scrooge’ Reeves’s National Insurance tax hike to ‘snatch’ 45% of donations, charities claim’Grocery tax’ to hike Britons’ shopping bills by £56 in Labour net zero ‘inflation boost’Homebuyers ‘unware of’ £5,000 hidden charge ahead of stamp duty riseAmong G7 nations, only Canada recorded a worse performance in terms of per capita growth. Shadow Chancellor Mel Stride said: “Growth has tanked on Labour’s watch.””The Labour Government must now urgently revisit their disastrous Budget and align economic policy with growth, not decline,” he added.Tory business spokesman Andrew Griffith was equally critical, stating it was proof Labour had “killed, plucked and cooked the UK economic goose.”Julian Jessop, economics fellow at the Institute of Economic Affairs think-tank, said the figures “confirm that the UK has suffered a Manchester City-style collapse,” comparing the economy’s performance to the Premier League champions’ recent poor form.

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