Unlock the editor’s digestion for free

FT editor Rula Khalf, selects his favorite stories in this weekly newspaper.

The UK Chancellor REWS will be forced to re -increase taxes in the autumn to meet his fiscal goals despite the fastest growth in the local levy for two decades in Wednesday’s review of Wednesday’s spending review, warning by experts.

Andy King, a former top officer at the office for budget responsibility, said that spending plans which are now with some liver with the left -wing ministers “in Ink” to draw to stretching to fill the fusant hole caused by high government borrowings and low economic development.

He said that bond investors would be “very risky” on the government’s borrowing due to the way of looking at Britain, while the promises not to increase tax to increase the promise of the manifesto would be “brave boundaries”, he said.

He said, “Something should be important if there is any material fiscal hole,” he said. “The writing is on the wall.”

An unexpected sharp decline in economic activity in April increases the risk with more government borrowings than expected that £ 9.9bn of Reaves’s financial headroom will be wiped out before the autumn budget, forcing his hand to increase more revenue.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), said: “The plan to spend and the Ironclad rules is being found within a GNAT’s whisker, any step in the wrong direction will definitely increase almost more tax.”

Reeves On Thursday, he refused to refuse to increase tax. “No Chancellor is able to write another four budget in the first year of a government. It is given. How uncertainty is there in the world at this time,” he told the BBC.

The Chancellor stressed that the plan for expenditure, including £ 113BN, was fully funded under the current budget.

However, the increase in the “spending power” for the local government and policing depends on the English local authorities, which chooses to increase the council tax to 5 percent, maximum allowed.

If the councils opted to do so, the bill would grow at the fastest rate on any Parliament since 2001-05, Johnson said.

This stress grows rapidly than the economy after years of the Whitehall budget. From 2019 to 2024, departmental expenses increased by 3.6 percent in a year; The an average actual increase in the average actual terms by 2029 is 2.3 percent.

“This is not a period of penance,” Johnson said. Particularly capital expenditure will be relatively more as part of national income.

However, the emphasis on health and defense will lead to great stress elsewhere, he said. Once the expansion of free school food will be excluded, the budget of the schools will become flat.

NHS was postponed as a big winner from Wednesday’s review of the expenditure of Wednesday. By the end of the decade, it will be responsible for half of the day-to-day departmental expenses compared to a third of 2010.

The main reason The government has not yet faced even more difficult options, it is that the OBR has been consistently more optimistic than other forecasts on the long -term growth capacity of the economy.

The OBR stated that its central forecast for GDP hike in March was 0.8 percent more than the average of other forecasts.

James Smith, research director at the Resolution Foundation, said that the OBR’s tendency increase would be “disastrous” for the fiscal approach to a possible decline in the notion of growth, as it shows that “the structural deficit is much higher than our thoughts and we need to increase taxes”.

The OBR was unanimously unanimously out of the line, the king said, if he was still in the watchdog, “I used to see the forecast again instead of publishing a one presented in March”.

In the autumn, OBR will require factor under the influence of the rights of new workers, changes in immigration rules that will withdraw development and stop the fact that tax and minimum wage increases “has suffered much more damage to employment than”, Smith said.

Economists say that increasing capital expenditure in Parliament by 3.6 percent-can help more than double-time-to-Articles at the rate of spending, especially where investment is broadcast in new transport projects or research and innovation.

However, focusing on defense and net zero means that GDP would be smaller than one, Johnson of IFFS said “when the government created such a large part of its agenda”.

Data visualization by Keith Fry