Chancellor’s £40bn tax raid weakens future growth and inflation will be higher, spending watchdog warns
Date: 2024-10-30FUTURE growth has been weakened by the Chancellor’s £40billion tax raid, while mortgage rates and inflation will be higher, the spending watchdog says.
Rachel Reeves’ claim that Labour was on a “mission for growth†was swiftly undone by GDP prediction figures released by the Office for Budget Responsibility.
The OBR said while the economy will grow faster in the short-term, by 1.1 per cent this year and two per cent in 2025, it will rise by less than two for the four years up to 2029.
The move by the Chancellor to add £70billion to public spending over the next five years also takes the UK’s tax burden to the highest level since records began, the OBR added.
The dour prospects for the future growth made money markets question the rationale for the biggest increases in spending, tax and borrowing of any Budget in history.
In a further blow to the Government’s “pro business†claims, Ms Reeves’ £25billion hit to firms from pushing up employers’ NI contributions will ultimately hit the pay packets of millions of workers.
The OBR told journalists: “The majority of workers will feel their real wages are lower.â€
That would result in higher prices — leading the Bank of England to keep interest rates higher for longer as inflation rises.
HS2 link of ‘value’ role boss
THE boss of the Government’s new Office for Value for Money is on the board of the HS2 project where costs have rocketed.
David Goldstone will monitor how public cash is spent as ministers take over the rail scheme where costs have doubled to £60billion.
Mr Goldstone, a non-executive HS2 director, previously ran the long-delayed Restoration and Renewal project to save the Houses of Parliament.
Accounts revealed he got a £168,000 bonus on top of his £311,000 salary.
He also led the London Legacy Development ÂCorporation which had the job of regenerating East London following the Olympics in 2012.
Of his new role, he said he was looking Âforward to bringing “renewed focus to ensuring we deliver maximum value for the publicâ€.
Rail line’s backing
PASSENGERS on HS2 will be able to travel into central London as the Chancellor yesterday unlocked cash to dig the rail line to Euston.
Rachel Reeves vowed to finish the four-and-a-half-mile tunnel from Old Oak Common, saying it was time to “get a grip†on the delayed London to Birmingham route.
The tunnel is expected to cost around £1billion.
The Chancellor also announced £500million in funding to fix potholes on the country’s roads.
