British Treasury chief Rachel Reeves is set to deliver her first budget in Parliament on Wednesday, marking the first budget by a Labour Party government in almost 15 years and the first ever delivered by a female finance minister. The budget is anticipated to strike a delicate balance, aiming to secure funds for investment through borrowing and tax increases while avoiding disruptions to businesses and minimizing the tax burden on working individuals.
Reeves faces the challenge of navigating stretched public finances, with the government acknowledging a more dire state than previously assessed upon taking office in July. Prime Minister Keir Starmer has cautioned that the budget will reflect the 'harsh light of fiscal reality.'
The Labour Party, which came into power in July, has emphasized the need to revitalize the economy, enhance public services like schools and hospitals, and address the alleged financial gaps left by the previous Conservative government. The government argues that higher taxes and controlled public spending are necessary to strengthen the economy after what it perceives as years of Conservative mismanagement.
The upcoming budget is expected to include tax hikes, with assurances from Labour not to increase the tax burden on 'working people.' Additionally, plans to boost the minimum wage to 12.21 pounds ($15.90) an hour and provide a 6.7% pay raise to around 3 million low-wage workers have been announced.
Reeves is likely to adjust the government's debt rules to allow for increased borrowing for investments in critical sectors such as healthcare, education, and infrastructure projects. The budget is crucial for the government's agenda of promoting long-term growth and improving living standards, particularly in light of the economic challenges posed by the pandemic.
While the budget is anticipated to be significant, caution is being exercised to prevent market concerns. Past instances of financial market volatility following unfunded tax cuts have underscored the importance of maintaining stability. The government's efforts to address public finances and stimulate economic growth will be closely scrutinized in the aftermath of the budget announcement.
