Reeves Signals End to Major UK Tax Rises
Chancellor Rachel Reeves has suggested the UK government is unlikely to introduce further tax rises after already lifting the tax burden by £66 billion across two budgets. Speaking at the World Economic Forum in Davos, Reeves said the government had “done enough on tax” and should not need to return for more hikes.
Her comments come amid mounting concern from households and businesses following successive tax-raising budgets under the Labour government.
‘Strong Position’ on Public Finances
Reeves told Bloomberg that the decision to more than double the margin of error against her fiscal rules to £21.7 billion in November’s Budget had strengthened confidence in the government’s finances. She said this buffer had put the Treasury in a “very strong position” and removed the need for additional tax measures in the spring.
The chancellor added that the government does not plan to make any tax changes at the upcoming spring statement.
Warning Over Global Uncertainty
Despite striking an optimistic tone on tax, Reeves cautioned that the global outlook remains volatile. “The world has become a very uncertain place,” she said, adding that she would “not write future budgets today.”
Her remarks echo comments made after Labour’s first Budget in 2024, when she claimed further tax rises would not be necessary a promise later broken when taxes were raised by an additional £26 billion last November.
UK Tax Burden at Postwar High
Labour’s measures across two autumn budgets have pushed the UK tax burden to its highest level since the Second World War. Reeves has argued the increases are necessary to fund public services and upgrade national infrastructure.
However, several policies have already been softened following political backlash, including changes to inheritance tax on farms and plans to ease the impact of business rate reforms on pubs.
Changes to Fiscal Oversight
Reeves also confirmed changes to how the Office for Budget Responsibility assesses government finances. Under the new system, the OBR will only judge compliance with fiscal rules once a year at the autumn Budget, rather than also during the spring statement.
She said the spring forecast would no longer be treated as a major fiscal event, reinforcing the government’s aim of providing greater certainty to markets and taxpayers.
Inflation and Trade Outlook
The chancellor said she expects inflation to return to the Bank of England’s 2 per cent target within months, which she believes will reassure investors about the UK’s economic direction.
While ruling out rejoining the EU single market or customs union, Reeves stressed the government’s commitment to reducing trade barriers and expanding agreements, pointing to recent deals with the US, India and improved access to EU markets.
Cautious Optimism After Tax Shock
Reeves’ insistence that further tax rises are unlikely may offer reassurance to voters and businesses fatigued by repeated fiscal shocks. But critics warn that her comments risk becoming another hostage to fortune if economic conditions deteriorate.
For now, the chancellor is betting that stability rather than further tax increases will define the next phase of Labour’s economic strategy.
