Chancellor Rachel Reeves confronted over Budget tax rises as new figures released
Rachel Reeves has insisted she wanted to "get our economy firing off all cylinders" - but declined to be drawn on any Budget tax raise.
The Chancellor's comments came as new GDP figures showed the economy grew by 0.3% in the three months to June. While the number fell short of the 0.7% recorded in the first three months of 2025 it was stronger than the 0.1% widely expected by economists.
Responding on Thursday, Ms Reeves said "the economy beat expectations in the second quarter of this year". But speaking at a construction site in Doncaster, the Chancellor said "there's still more to do to make sure that people in all parts of the country benefit" from growth. She added: "My number one priority as Chancellor, to get our economy firing off all cylinders so that working people in all parts of the country will feel the benefits of that economic growth." It comes after the Chancellor gave an update on wealth tax calls as pressure mounts to target richest Brits.
Quizzed on whether taxes will have to increase in the autumn, Ms Reeves told reporters: "We'll wait for the official forecast from the Office of Budget Responsibility, and we'll make those decisions in the round."
Earlier this week it was reported the Chancellor is looking at changes to inheritance tax in an attempt to plug a hole in the public finances. Officials are said to be examining whether to tighten rules around the gifting of money and assets before someone dies. But no decisions have been made.
Ms Reeves added: "Any decision around taxation is a ... decision for the Budget, and I'll make those announcements. We haven't even set the date yet for the Budget, but the key focus of the Budget is going to be to build on numbers that we've seen today to boost productivity and growth and prosperity all across the country."
ONS director of economic statistics Liz McKeown said: "Growth slowed in the second quarter after a strong start to the year. The economy was weak across April and May, with some activity having been brought forward to February and March ahead of stamp duty and tariff changes, but then recovered strongly in June.
"Across the second quarter as a whole, growth was led by services, with computer programming, health and vehicle leasing growing."
Responding to reports of an inheritance tax change yesterday, a Treasury spokesperson said: "The best way to strengthen public finances is by growing the economy - which is our focus. Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn.
"We are committed to keeping taxes for working people as low as possible, which is why at last autumn's budget, we protected working people's payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee national insurance or VAT."
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The Guardian
2 minutes ago
- The Guardian
Want more productivity, Rachel Reeves? It's time to embrace Mancunian swagger
Over the summer Rachel Reeves has been on a road trip around Britain. From Cornwall and Kent, to Aberdeen, south Wales and Belfast, in search of the solutions for a national economy that is stuck in a rut. Inspired by this tour, the chancellor used a Guardian article last week to set her autumn budget priority: boosting productivity. Tax and spending may dominate news headlines, but this is the real problem facing the country, and no politician of the past two decades has managed to fix it. Productivity is a dull word of vital importance. Growing the measure of output for each hour of work is an economic secret sauce, enabling growth in wages and living standards over the long-run without stoking inflation. On the hunt for solutions, Reeves could have extended her trip. Leaving Westminster on a (most probably delayed) Avanti train from Euston, or an overcrowded TransPennine Express from her Leeds constituency; for the wetter side of northern England, where Manchester is having a moment in the sun. Unlike the rest of Britain, there are signs of life in Greater Manchester's productivity. Between 2004 and 2023, the city region recorded the highest rise in gross value added for each hour worked of any combined authority in the country. London – once the driver of UK growth – has effectively stalled. The capital is still streets ahead in terms of productivity and the UK is still one of the most regionally unequal countries in Europe, with no regions outside London and the south-east of England above the national average. But Manchester is beginning to close the gap – with growth of 31% since 2004. To anyone familiar with the north-west, this will probably come as no surprise. Manchester has changed beyond all recognition in recent years, never mind the past two decades. The Haçienda has been a posh block of flats for longer than it was at the epicentre of the 'Madchester' music scene. The class of '92 swapped Old Trafford for building luxury hotels long ago, petrodollar cash has flooded the east of the city, and Oasis have just added, by some counts, £1bn to the British economy at large. 'Manchester has got this buzz about it,' says Jim O'Neill, the former Goldman Sachs chief economist, and a proud Mancunian, who now chairs the Northern Powerhouse Partnership. 'It's always been there for years in the [city] centre. But most importantly it's now spreading. Some would say it's that Manchester swagger. It all relates to an attitude that 'we can do this; we want to see it happen'. I don't know another part of the country where it has that vibe.' For years Britain's productivity growth has been a dismal disappointment. Before the 2008 financial crisis growth averaged 2% a year, but has trickled to well below 1% since. Figures last week showed growth contracted in the year to June. With the autumn budget not far off, this is fuelling a sense of alarm in the Treasury. Whitehall is abuzz with speculation that the Office for Budget Responsibility is poised to hand Reeves downgraded productivity forecasts – with the potential to blow a £20bn hole in her tax and spending plans. To turn things around, Reeves could take the ingredients behind Manchester's renaissance and apply them elsewhere. She could also double down on the 'Northern Powerhouse' strategy for good measure. Sources close to Labour say that is exactly the plan: Keir Starmer and Reeves are expected to launch an intensified regional growth strategy next month, with the revival of the Northern Powerhouse Rail project as its centrepiece. Those who know Manchester best say there are a few golden threads to the renaissance of Cottonopolis: devolution; political stability and coordination between its policymakers, businesses and institutions; the involvement of its top universities; and sustained investment. Andy Burnham, the mayor of Greater Manchester, says London hasn't entirely cottoned on. The city symbolised by the worker bee has done well, but could have done even more with extra money and power from the Treasury. 'The learning for Whitehall is, if you want productivity growth, and growth more broadly, you have to let go and trust places. And you have to invest. Because you can't get it without investment. '[But] there is a bias against cities outside London and the south, and as long as this remains, the country will not achieve its full potential.' Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion 'I compare Manchester [today] with the city I came back to after uni, and the one I had to leave to get on in life. It's been a major shift. The momentum is there now, and it's what you do with that next.' In truth the Manchester revival has deep roots. The timeline before Burnham's arrival as mayor in 2017 is well known: the 1996 IRA bomb as catalyst for city centre regeneration; the 2002 Commonwealth Games, the opening of Salford Media City, the Lowry, Bridgewater Hall and the expansion of the Metrolink. Led by the city council's former chief executive, Howard Bernstein, and leader, Richard Leese, their 'Manchester family' approach to coordinating investment proves Reeves's theory that public money can 'crowd in' the private sector : Manchester has ranked top outside London for foreign direct investment projects for three of the past five years. However, the transformation isn't all plain sailing. House prices and rents are rocketing, crowding out families from Manchester's poorer suburbs. For those who, like me, grew up around these parts, the skyscraper-sprouting skyline is a source of both pride, but also nagging worry. Could the pace of change sweep away something special, in a city used to doing things differently? And are the proceeds of growth lining Mancunian pockets, or flowing out of the Irwell to an offshore bank account? Burnham is alive to the danger. 'I use the phrase that, the kids can see the skyscrapers from their bedroom window but they currently don't see a path to the modern Greater Manchester economy. The next phase is about making that path.' Still, the addition of glass-fronted flats and office blocks among the converted Victorian mills has helped Manchester to create more jobs at a faster pace than the UK average. They reflect Labour's hopes for Britain more broadly: that a fairer distribution of growth, in theory, will become easier if there is some growth in the first place. Reeves could do with a few more Mancunian economic miracles. The national economy will not come unstuck without Britain's biggest regional cities reaching their full productive potential. In her first conference speech as chancellor last year, along the M62 in Liverpool, Reeves promised a Labour government would mean 'shovels in the ground. Cranes in the sky. The sounds and the sights of the future arriving.' To the next critic who asks when exactly that will come about, a Manchester reference may help.
Daily Record
31 minutes ago
- Daily Record
The 10 high street stores Brits want to return most with one clear favourite
High streets across the UK are struggling thanks to the rise in online shopping - but there are some brands we want to see make a comeback. With the rise in online shopping over the last couple of decades, there was always going to be a consequence. And as we see store after store closing on high streets across the country, it's not hard to see who has been hit the worst. Online shopping is quick and easy, and it means you can pick out a whole host of different items from a variety of different brands without even having to leave your couch. But as more and more of us buy clothes, gadgets, decorations, books, and more with just a few clicks, it is taking its toll on in-person stores. This month, a huge number of major retailers are shutting shops across the UK. And there are some big names that have left the high street for good in recent years. Some still have an online presence but others are only alive in our memories. As with anything that we once enjoyed but no longer have access to, people long for their return - and shops are no different. The experts at Liquidation Centre analysed search data to reveal which former brands shoppers most want to see make a comeback. And one major retailer was the clear favourite among UK consumers. Debenhams had an average monthly search volume of 499,000 in the UK - more than 7.5 times that of its nearest rival. This may be in part down to the fact that the department store still has a big online sales presence, but it is an indicator of how prominent Debenhams has been in the lives of Brits. Boohoo bought the brand and its website in 2021, ensuring that Debenhams' near 250-year-old history survived, but didn't pick up the high street stores, which eventually closed down. While many Brits long for its return to the high street, it seems unlikely as the chief executive said that it will be "Britain's online department store". Liquidation Centre director Richard Hunt said: 'The combination of failing to adapt to shifting consumer habits towards online shopping alongside the financial impact of Brexit and the pandemic contributed towards Debenhams financial strain. "However, their issues began years prior to these events, with the company carrying unsustainable debts due to poor financial decisions. Their online-only comeback will be exciting for many fans, but it also serves as a stark reminder of their failure to compete effectively on the high street amid a changing market.' In second spot, though some way behind, was Dorothy Perkins with 65,000 average monthly searches. The fashion firm's former owner, Arcadia Group, fell into administration in 2020, with all their brands sold off the following year. Hunt said: 'Dorothy Perkins, part of Arcadia Group, is another example of a traditional retailer acquired by online giants like Boohoo. "Despite undergoing a CVA (Company Voluntary Agreement) to repay debts and avoid liquidation, the company's failure to compete with fast-growing online retailers, combined with a changing market landscape and high overheads, led to crippling financial issues, which ultimately led to the downfall of the business. Rounding out the top three, just behind Dorothy Perkins, was Toys R Us. The much-loved kids' store was a huge feature of the childhoods of Millennials and Gen Xers, and it still amasses 61,000 monthly searches. The toymakers went into administration in 2018, with all its stores closing as a result. The firm had been facing a £15million tax bill and, due to falling sales, they were unable to make the payment. Toys R Us also struggled to keep up with the growth and popularity of technology among children's toys, compared to their more traditional products. Hunt said: "Toys R Us seemed to fail to move with the times. As children's interests began to shift towards more tech-related items, the stores failed to adapt and capitalise on this trend. "They were also priced out of a very competitive market, with other brands offering the same quality branded toys at a lower price. Additionally, reports pointed to dull, outdated store interiors that lacked the excitement and appeal once central to the Toys R Us experience. More enticing and exciting options become available, leaving the brand behind." Some other huge brands were also in the top 10 list, including Mothercare, BHS, Woolworths, and Blockbuster. With many of these brands, they were unable to stay relevant and evolve with the times in a competitive market. Offering his expert insights, Richard Hunt said: "The current economic climate poses increasing risks to businesses, especially those in the retail sector. It is much easier to lose consumers than to retain them, which is why regular market research and competitor analysis are so essential. Staying ahead of the curve as conditions evolve is critical to long-term survival. "As we've seen, poor financial management and decisions have contributed to the downfall of several once-iconic household brands, proving how crucial it is to have effective financial strategies and management in place." Join the Daily Record WhatsApp community! Get the latest news sent straight to your messages by joining our WhatsApp community today. You'll receive daily updates on breaking news as well as the top headlines across Scotland. No one will be able to see who is signed up and no one can send messages except the Daily Record team. All you have to do is click here if you're on mobile, select 'Join Community' and you're in! If you're on a desktop, simply scan the QR code above with your phone and click 'Join Community'. We also treat our community members to special offers, promotions, and adverts from us and our partners. If you don't like our community, you can check out any time you like. To leave our community click on the name at the top of your screen and choose 'exit group'. The 10 high street brands Brits most want to see make a return Debenhams, 499,000 average monthly searches Dorothy Perkins, 65,000 Toys R Us, 61,000 Cath Kidston, 35,000 Thorntons, 32,000 Mothercare, 28,000 BHS, 22,000 Woolworths, 19,000 Miss Selfridge, 9,500 Blockbuster, 8,330
Telegraph
an hour ago
- Telegraph
Scrap two-child benefit cap, Kinnock tells Starmer
Lord Kinnock has urged Sir Keir Starmer to scrap the two-child benefit cap. The Labour peer and former party leader said the policy, which restricts access to child tax credits and other benefits, was responsible for keeping hundreds of thousands of children in poverty. Lord Kinnock's intervention comes weeks after he called on Sir Keir to introduce a new wealth tax and suggested a 2 per cent levy on assets worth more than £10 million. His remarks will pile further pressure on Rachel Reeves, the Chancellor, to rethink the two-child limit in the Budget this autumn, despite warnings that she already faces a financial black hole of up to £50bn. The two-child benefit cap was brought in by the Conservatives in 2017 and prevents parents from claiming child tax credit or Universal Credit for their third and any subsequent children. Sir Keir has refused to scrap the cap because of the economic implications of doing so. Seven Labour MPs were suspended last July after they backed an SNP proposal to ditch the two-child limit. Asked about the policy in an interview with The Mirror, Lord Kinnock said: 'I would want them to do it. They may not be able to do it all at once, but I really want them to move in that direction. 'Because the figures are that, if that did occur, it would mean that about 600,000 kids, fewer, are in poverty.' He added: 'Yes, I would say that. It might have to be done in a phased fashion – simply because of the revenue implications – but heading strongly and evidently in that direction is the way to go.' 'The economics of Robin Hood' Lord Kinnock went on to repeat his call for a wealth tax, arguing that targeting the wealth of the richest Britons could dramatically reduce the scale of child poverty. 'I think people would see the justification of increasing taxes on assets and the very, very highly paid – I'm talking about the top one per cent – in order to make the transfer directly to reduce child poverty,' he said. 'I know it's the economics of Robin Hood, but I don't think there is anything terribly bad about that.' Bridget Phillipson, the Education Secretary, sparked a backlash from the Labour Left last month after stating that Sir Keir's capitulation on welfare cuts left less room to abolish the two-child cap. The Prime Minister was forced to heavily water down plans to slash disability benefits by £5bn a year after more than 120 of his own MPs said they could not support his proposals as they stood. Pressed on whether the cap was likely to stay because there was now less money, Ms Phillipson said: 'The decisions that have been taken this last week do make future decisions harder. 'But all of that said, we will look at this collectively in terms of all of the ways that we can lift children out of poverty.' While Labour has refused to explicitly rule out abolishing the cap, Cabinet ministers have repeatedly warned that it would mean savings would have to be found elsewhere. In a recent rare intervention, Gordon Brown, the former prime minister, as a 'cancer in society', comparing its current scale to the deprivation he saw as a child more than 50 years ago. 'What the Conservatives did was to treat the third children as if they were second-class citizens,' Mr Brown said. 'But the needs of a third child are exactly the same as the needs of the first and second.'
