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THE UK’S LABOUR government released its first budget today, announcing a significant hike in tax paid by employers as well as higher borrowing and spending on public services.
It’s the first budget since the end of the Conservative Party’s 14 years in power and it generated plenty of anticipation.
The Labour government kept its pledge not to raise income taxes, employee national insurance charges, or value added tax but said £25 billion would come from hiking employers’ national insurance, a tax that functions similarly to how PRSI works in Ireland.
UK Chancellor Rachel Reeves said tax increases overall would raise an additional £40 billion and that changes to fiscal rules would allow the government to invest billions more in public services.
“This government was given a mandate to restore stability to our country and to begin a decade of national renewal. The only way to drive economic growth is to invest, invest, invest,” Reeves said.
Labour won a landslide general election in July and had already announced a raft of economic measures, including improved workers’ rights and minimum wages, a vast green-energy plan and plans for mass building of homes.
Ahead of the budget, it drew criticism for scrapping a winter-fuel benefit scheme for millions of pensioners, hurting UK Prime Minister Keir Starmer’s approval rating in polls.
“I am restoring stability to our public finances and rebuilding our public services,” Reeves said today.
The pound won back ground as Reeves spoke, while London’s stock market was little changed.
“At this stage, massive tax rises have not spooked financial markets”, said Kathleen Brooks, research director at traders XTB.
Outgoing Tory leader Rishi Sunak, Britain’s former prime minister, said the budget contains “broken promise after broken promise”.
He accused the government of “delivering a tidal wave of anti-business regulations”.
Ahead of her tax and spend plans, Reeves made a technical change to the way UK debt is measured to allow her to borrow more, even though the country’s public sector borrowing is now at levels last seen in the 1960s.
To boost investment, the chancellor will use a wider measure of debt that takes into account the future returns on investment.
Reeves said the extra investment in capital infrastructure projects would start to “repair the fabric of our nation”.
The government will invest billions of pounds to rebuild schools, hire teachers and fund childcare.
In a surprise move, she extended a freeze on fuel duty until next year.
The cash-strapped National Health Service will receive a substantial boost, with the day-to-day health budget receiving an increase of nearly £23 billion.
But there are costs to borrowing more, said Institute for Fiscal Studies director Paul Johnson.
“The challenge will be to make sure the money is spent well enough to make those costs worth bearing,” he said.
Alongside the budget, Reeves said Britain’s economy was set to grow faster than forecast this year and next.
The nation’s gross domestic product will expand 1.1% in 2024 and by 2% next year — above estimates given in March by the Office for Budget Responsibility (OBR), Britain’s fiscal watchdog.
Britain is benefiting from its annual inflation rate dropping to under the Bank of England’s 2% target, easing a cost-of-living crisis.
The International Monetary Fund this month also estimated that Britain’s economy would grow 1.1% in 2024.
Looking beyond next year, the OBR on Wednesday downgraded Britain’s growth forecasts for the 2026-2028 period.
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What a shock, Labour lied about tax increases. Instead of doing the right thing and privatising useless government bodies like the NHS and abolish useless government ministries like Education, Transport, Health and Tourism they compounded their incompetence by increasing public spending. Their 40 billion pound tax hikes punish those who create wealth in Britain and work the hardest. Labour promised to be different than the Tories with their policies but it’s just the same old tax and spend stale left-wing economics that put Britain in the position that they are in right now.
@Frank O’Hara: stop now Frank….the NHS is fantastic ,otherwise it’s the private health nightmare that the USA has..
@David Cotter: The NHS is a terrible system not worthy of any public funding and it should be abolished. They have the longest waiting times to see a GP, to get a surgery done, to get chemotherapy and sights of people waiting 18 hours on a trolley are commonplace. America, on the other hand, has a far superior system that we ourselves could do with. They have the lowest wait times for surgery, the highest rate of cancer survival, the highest number of organ transplants performed, fastest access to specialist care and when new treatments and medical technology comes on the market, America is the first to get it because they invest the most amount of money into healthcare research, and as a result, the highest number of medical patents are filed there.
@Frank O’Hara: forgot the 10 to 15 thousand a year for insurance Frank
@David Cotter: That’s a good thing. It makes sure that those who mooch off our society and don’t work hard are not entitled to the same standard of healthcare as those who do.
@Frank O’Hara: so if you work and pay high insurance costs, you have the right ho live longer than those who don’t?
@brian madden: No one is dying in America, like you seem to think. They just have a fairer system where those who work harder and earn more money are entitled to better healthcare. It’s the exact same as a hotel or an airplane. If you can pay for it, you should be entitled to a better standard than those who can’t.
@Frank O’Hara: hahaha. Your ridiculous ,wealthy families with inherited wealth never work a day in their lives.
Yours is a extreme ideology.human beings shouldn’t suffer because they’ve not enough money
BTW people are dying in America every day due to lack of healthcare……google it
@David Cotter: Once again, you’re telling lies David. 88% of millionaires and 70% of billionaires in America are self-made. America is the greatest country in the work for a reason. It has a brilliant healthcare system to back up its brilliant economic system. Do you know what’s real greed? Taking money off someone who has earned it to give to someone else who hasn’t. That’s what systems like the NHS and the HSE are run on. Stealing money off people through taxation in order to subsidise healthcare for those who don’t deserve it.
@Frank O’Hara: your right ..billionaires aren’t greedy at all
@David Cotter: What about all the people who die in Britain and in Ireland because they can’t even get a bed in a hospital room and are stuck waiting in a cold corridor on a trolley for 18 hours? That doesn’t happen in America because people who have actually earned their healthcare get seen to by a doctor. As I said earlier, there’s a reason why they have the shortest waiting times for surgery, the highest rate of cancer survival, the highest number of organ transplants performed and the quickest access to specialist care.
@Frank O’Hara: yes all true but only if you can afford it…is that what we want ..it make’s society unfair and citizens resentful
@David Cotter: Inequality is not always an inherently bad thing. Sure the rich have gotten richer over the past 50 years, but the poor have also gotten richer by 32%. Afghanistan has lower inequality than Ireland, but we wouldn’t say that it’s a fairer society, would we? That’s because in Afghanistan, everyone is equally poor. The rich still exist there, but they get their money from the Taliban government because they are high-ranking members and not through the free-market and from providing people with cool new stuff, like what Elon Musk and Jeff Bezos did in America, or like the Collison Brothers or Denis O’Brien did here.
@Frank O’Hara: you are joking , Americans die all the time because they can’t afford healthcare. Literally dying because they can’t afford a bottle of insulin.
@Martainn O’keefe: People die over here in Ireland and Britain as well due to bureaucratic negligence and mistreatment. No healthcare system is perfect, but America sure as heck has a much better system than the HSE here or the NHS over in Britain. It’s not as simple as saying that “People are dying because they can’t afford a bottle of insulin.” America has structures in place like Medicaid and Medicare to make sure that these situations are very rare, while at the same time making sure that those who are able to afford a higher standard of healthcare are entitled to it. With the HSE and NHS, we all suffer from a poor standard of care, no matter how hard we have worked in life and how much wealth we have accumulated.
@Frank O’Hara: only if you have the money to pay for it.
The bleating and whining from the daily Mail,telegraph and GB news is incredible….maybe this Labour government will,create a more equal Brittan…
Rees mogg is loosing his cp@p
Millionaires threatening to leave..haha it’s as good as a play..
@David Cotter: the economic ideology between Labour and the Tories couldn’t be more stark. I hope it works for them
@Kevin Kerr: Starmer’s recent kowtowing to Netanyahu was a major disappointment to me.
Like the Democrats v. Republicans in the US, Labour is vastly preferable to the Tories in almost all respects, yet all four parties seem perfectly happy to facilitate genocide. We shouldn’t cease to be shocked by this.
@David Cotter: Well said. The comment section on the Telegraph’s main budget article makes from a depressing or darly funny read with it being full of pee, vinegar and massive moaners. Apparently nobody but Maggie Thatcher ever did anything right, everybody else is, er, left.
@Brendan O’Brien: absolutely, they’re far from perfect – the least worse option, which is a depressing thought
@Brendan O’Brien: what genocide?
What a bunch of liars Labour are. Betrayed the people. Farage will gain from this.
@Buster Lawless: And what people did they betray? Plenty benefited from this such as those on minimum wage of which there are many. You’re comment is rather empty.
@The Don: growth through investment- it’s their best chance
@Injustice Cop: All pensioners who cannot afford food or heat. They have been betrayed, but you think old people are worthless?.sickening behavior from steir.
@Buster Lawless: the elderly get £200 fuel allowance every winter , free prescriptions, free bus pass, hey re well looked after despite what the daily mail will tell you.
Farage ..really,maybe they will go from 5 seats to 6.. that’s as big as his gain will be
a Labour budget from a Labour Government, first year in Office it’s no shock except for Tories, see their faces, shock and horror at the competence and intelligence of the Chancellor of the Exchequer
@Gerry Ryan: she handed them their arse . Superb performance from a serious politician , former BoE economist ..
Labour want to kill off the elderly to make room for illegal immigrants
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