Chancellor Rachel Reeves has warned she will make “necessary choices” in her upcoming Budget, signalling that tax rises may be on the table despite Labour’s election pledges.
In a rare Downing Street speech, she refused to rule out increases to income tax, VAT or National Insurance, saying she was “setting the context for the Budget.”
Reeves promised a “Budget for growth with fairness at its heart,” focused on reducing debt, tackling NHS waiting lists and easing the cost of living.
She said difficult decisions were needed to protect families and public services while keeping the economy “secure with debt under control.”
Critics accused her of paving the way for a U-turn, with Conservative leader Kemi Badenoch calling the address “one long waffle bomb.”
The Resolution Foundation said avoiding major tax rises “would do more harm than good,” estimating Reeves needs to raise £25bn to balance the books.
Economists believe higher income tax or extending the freeze on tax thresholds are the most likely options, though politically risky.
The pound fell to a seven-month low after the speech, as markets digested the prospect of a tougher fiscal stance.