Chancellor Rachel Reeves has signalled her first budget as chancellor could be a painful mix of spending cuts, tax rises and increased borrowing.
Speaking to Sky News after official figures showed the economy flatlined in July with GDP growth of 0.0%, she refused to rule out increasing business and wealth taxes, or further cuts to already strained departmental budgets, as she seeks to address what she says is a dire economic inheritance from the last government.
“I’ve been really honest that there are difficult decisions to come in the budget, on spending, on taxation and welfare, after the mess that the previous government created with the public finances and the state that they are in, that was inevitable,” she said.
“I was clear during the election campaign that, if I became chancellor of the exchequer, tough choices lie ahead.”
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Ms Reeves has ruled out increasing personal income taxes, National Insurance and VAT as well as corporation tax, leaving a limited field of other taxes on private wealth and business.
She said her choices in the budget would be directed at getting a grip on the public finances.
“It is important to bring stability back to our economy, but we will do that in a way that helps promote growth, so we can grow our economy and make our country better off,” she said.
The need to stimulate growth was emphasised by the figures from the Office for National Statistics that showed the economy stalled in June and July, consecutive months of zero expansion, after above-expectation growth in the first half of the year.
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