Rachel Reeves refuses to rule out MORE tax hikes after spending spree plunged into crisis

The Sun

12-06-2025

RACHEL Reeves refused to rule out hiking up taxes after her spending plans were threatened by dismal growth figures.
The Chancellor insisted she wasn't going to write Budgets for the next four years after the UK economy for shrank by 0.3 per cent in April - the biggest monthly drop for 18 months.
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The move came after she hit back at suggestions she was the 'Klarna Chancellor' after accusations her spending review was buy now and pay later.
Ms Reeves told LBC News: "I am not going to write four years worth of budgets... It would be very risky for a Chancellor to write a budget in a world as uncertain as this.
"I can say I won't have to repeat a budget like last year, I wiped the slate clean. We do now have that path to lower borrowing and debt".
The Chancellor was speaking after she revelled in a £300 billion spending splurge increasing spending for health and defence and outlining new infrastructure projects.
But Ms Reeves pointed to "uncertainty about tariffs" had led to the fall in GDP for April following Donald Trump''s global tariff war.
The world trade war combined with stubborn inflation and slow growth are likely to see tax rises or major spending cuts at the Budget this autumn.
She said: 'We know that April was a challenging month.
"There was a huge uncertainty about tariffs, and one of the things if you dig into those GDP numbers today is exports weakening and also production weakening because of that uncertainty in the world around tariffs.'
Analysis: Growth figures are wake up call after spending splurge
By Ryan Sabey, Economics Editor
Rachel Reeves revelled in a major spending splurge yesterday - but this morning she wakes up to a reality check.
The Chancellor says that the figures are "clearly disappointing" but its a stark reminder of the fragility of the UK economy and how difficult it will be to turbo-charge growth.
The effects of 'Awful April' - when a slew of added costs for business including that national insurance rise came in - has hit home.
This Labour government has put that push for growth as their number one mission which will have the knock-on effect of driving up living standards.
After a positive start to the year - where we saw growth up by 0.7 per cent - today we see it drop by 0.3 per cent for April.
We shouldn't take one month's figures in isolation but the fear is conditions for business and entrepreneurs have hit them hard.
The hike to national insurance contributions and minimum wage for firms kicked in at the start of April and this is how the economy has reacted.
As the British Chambers of Commerce outline the NI rise has hit investment, recruitment and prices.
The uncertainty of Donald Trump's tariffs is also a drag on the UK with the largest monthly fall on record in goods exports to the US.
With dismal economic growth, the global trade war and stubborn inflation, the Chancellor will surely be left with little choice but to cut spending or raise taxes in the autumn.
She has iron-clad fiscal rules she insists are non-negotiable so it feels inevitable something will have to give.
Tory leader Kemi Badenoch hit out at Ministers saying they were waging a "war" with business.
She highlighted how ' Awful April' when National Insurance contributions for business were hikes and minimum wage payments went up.
The party leader said: "This is a war on the private sector, where private businesses are having to cut their coat according to their cloth.
"They're having to downsize. They're having to let go of staff, but no reforms are being asked for any parts of the public sector.
'Of course, we want to fund public services, but we need to make sure that we're doing things better.'
Ms Reeves outlined her spending review yesterday saying it was time for national renewal.
She told Labour MPs at an event last night that she needed to "sell" the benefits of her plans to voters on the doorstep.