Brits face more tax rises in the Autumn, think tank warns after Chancellor failed to rule them out
27 March 2025, 15:00 | Updated: 27 March 2025, 15:07
Rachel Reeves doesn't rule out more tax rises
Brits face being hit with tax hikes in the Autumn, a respected think tank warned a day after the Chancellor delivered her Spring Statement.
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The Institute for Fiscal Studies has warned that the chances of Rachel Reeves meeting her fiscal rules are little more than a ‘coin toss’.
Economists have highlighted that the plans are incredibly tight and that Ms Reeves has left herself with ‘very small’ headroom of £9.9bn if public finances deteriorate.
Paul Johnson, director of the IFS, said it would be ‘likely’ that tax rises would be needed if the economy doesn’t pick up.
"There's a good chance that economic and fiscal forecasts will deteriorate significantly between now and an Autumn Budget. If so, she will need to come back for more which will likely mean raising taxes even further," he said.
Earlier today Ms Reeves told LBC she wants lower taxes "on working people" - but failed to rule out future increases.
Speaking after her Spring Statement on Wednesday, the Chancellor told LBC's Nick Ferrari at Breakfast that her "instincts" were to reduce taxes - but declined to commit further.
"I'm not going to write another four years' Budgets at the spring statement," she said.
Ms Reeves cited the Labour election manifesto that claimed the party wouldn't increase national insurance, income tax or VAT on working people", adding: "We'll continue to stick with that pledge."
Asked about national insurance increases for employers, which come in in April, Ms Reeves pointed the finger at the Conservatives and said "the alternative would have been to have left the public finances in a mess".
Rachel Reeves speaks to Nick after Spring Statement
She told Nick: "We've now wiped the slate clean on that economic mismanagement, which means that we can now respond to a changing world environment, including by putting more money into defence to reach 2.5% of GDP, to help protect Britain and secure our defences in the next couple of years."
An estimated 250,000 more people, including 50,000 children, will be left in relative poverty after housing costs by the end of the decade as a result of the Government's squeeze on welfare, according to its own impact assessment.
The changes will affect about three million families on incapacity benefits, while 800,000 claimants will have reduced personal independence payments (Pip).
A forecast after the Spring Statement found that lower-income households are set to become £500 a year poorer over the next five years.
Asked about the changes, Ms Reeves insisted that the welfare state "will continue to be there for people when they need it."
She told Nick: "But for people who can go to work, we're going to provide the support. Not writing people off, but providing them the support to get back into work."
Ms Reeves' fellow Treasury minister Darren Jones courted controversy on Wednesday when he compared benefits to pocket money.
Asked by Nick about the comparison, which she appeared to agree with an interview with LBC's Iain Dale on Wednesday evening, the Chancellor said: "No, of course it's not like that.
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The Office for Budget Responsibility also halved its forecast for growth in gross domestic product in 2025 from 2% to just 1%, but upgraded its forecasts for subsequent years.
GDP is expected to increase by 1.9% in 2026, 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029, though the watchdog warned tariffs threatened by Donald Trump could wipe out the Chancellor's relatively thin £9.9 billion buffer.
Asked by Nick about the 2025 figure, Ms Reeves said: "You've chosen one year of numbers from the OBR yesterday, but in every other year for the rest of the decade, the Office of Budget Responsibility revised up their growth forecast.
Andrew Marr puts Labour MP on the spot over benefits cuts | LBC
She added: "In fact, by the end of the Parliament, they're predicting that the economy will be bigger than they were previously estimating. So that contributes to the average person being £500 better off."
The OBR also warned tariffs threatened by Donald Trump could wipe out the Chancellor's relatively thin £9.9 billion buffer.
The US president announced on Wednesday night he was placing a 25% levy on car imports to America, sparking further uncertainty.
Ms Reeves said in response that she believes in "free and open trade".
She told Nick: "Our Prime Minister was with Donald Trump in the White House a few weeks ago. As you know, we are in the process of intense talks with the United States ahead of those tariffs coming in next week to try and secure a deal. But, you know, this is a delicate moment. A few days left of those negotiations to go.
"I recognise that tariffs, whether they fall on the UK or not, will have consequences for economies around the world"."
