{"id":22067,"date":"2025-01-30T03:03:37","date_gmt":"2025-01-30T03:03:37","guid":{"rendered":"https:\/\/news.godj.com\/news\/warning-high-borrowing-costs-may-mean-tax-rises-or-spending-cuts\/"},"modified":"2025-01-30T03:03:37","modified_gmt":"2025-01-30T03:03:37","slug":"warning-high-borrowing-costs-may-mean-tax-rises-or-spending-cuts","status":"publish","type":"post","link":"https:\/\/news.godj.com\/news\/warning-high-borrowing-costs-may-mean-tax-rises-or-spending-cuts\/","title":{"rendered":"Warning high borrowing costs may mean tax rises or spending cuts"},"content":{"rendered":"


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Higher borrowing costs for the government may mean tax rises or spending cuts if it wants to stick to its own self-imposed rules, a leading economic think tank has warned.<\/p>\n

According to a report from the Resolution Foundation, the government is spending \u00a37bn a year more paying interest on its debt than it was at the time of the Budget.<\/p>\n

As a result, the think tank said higher tax or cuts “may be needed” if the government wants to keep its promise not to spend more day-to-day than it brings in through tax.<\/p>\n

A Treasury spokesperson told the BBC its commitment to its fiscal rules is “non-negotiable”.<\/p>\n<\/div>\n

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The report comes after Chancellor Rachel Reeves revealed her plan to boost the economy through backing a series of infrastructure projects<\/a>, including a third runway at Heathrow.<\/p>\n

Government borrowing costs began rising after the Budget last Autumn.<\/p>\n

The Resolution Foundation said the rise has been “primarily driven by international factors”, with US and European government debt also rising.<\/p>\n

Other economists have said higher borrowing costs are at least partly a reaction to sluggish growth in the UK economy.<\/p>\n

The increase has been much lower than following the 2022 mini-Budget, and borrowing levels have fallen since hitting their highest levels in several years earlier this month.<\/p>\n

However, the Resolution Foundation said the risk of the government of breaking its own fiscal rules “remains on a knife edge” because borrowing costs remain higher than in the Autumn.<\/p>\n<\/div>\n

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Resolution Foundation research director James Smith said Chancellor Rachel Reeves will need to meet the fiscal rules “or risk further market jitters”.<\/p>\n

“While the chancellor is rightly focused on fleshing out her long-term strategy for economic growth, tough short-term decisions, including fresh tax rises or spending cuts, may also be needed in the coming weeks to demonstrate her commitment to sustainable public finances,” he added.<\/p>\n

The government has already said it wants to cut down on “waste” and has said tax rises might be a possibility.<\/p>\n

Reeves said in December departments would be asked to identify 5% “efficiency savings” as part of a review to set their budgets for the coming years.<\/p>\n

“The chancellor has already shown that tough decisions on spending will be taken, with the spending review to root out waste ongoing,” a Treasury spokesperson told the BBC.<\/p>\n

Meanwhile, Prime Minister Sir Keir Starmer did not rule out more tax rises when asked by the BBC in December.<\/p>\n

“If you look at Covid and Ukraine, everyone knows there are things we can’t see now, but I can tell you our intention was to do the tough stuff in that Budget, not keep coming back,” he said.<\/p>\n<\/div>\n


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Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Higher borrowing costs for the government may mean tax rises or spending cuts if it wants to stick to its own self-imposed rules, a leading economic think tank has warned. According to a report from the Resolution Foundation, the government is spending \u00a37bn a year more paying interest on its debt than it was at […]<\/p>\n","protected":false},"author":1,"featured_media":22068,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[61],"tags":[3145,919,685,1062,1287,2052,2277,1022],"class_list":["post-22067","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","tag-borrowing","tag-costs","tag-cuts","tag-high","tag-rises","tag-spending","tag-tax","tag-warning"],"_links":{"self":[{"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/posts\/22067","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/comments?post=22067"}],"version-history":[{"count":1,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/posts\/22067\/revisions"}],"predecessor-version":[{"id":22069,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/posts\/22067\/revisions\/22069"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/media\/22068"}],"wp:attachment":[{"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/media?parent=22067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/categories?post=22067"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.godj.com\/news\/wp-json\/wp\/v2\/tags?post=22067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}