The government is likely to announce tax increases at the Autumn Budget as high borrowing costs and an economic downturn persist. The freezing of tax allowances and thresholds will lead to more individuals facing higher tax rates in real terms. There are concerns about whether the government will increase broad-based taxes or employ stealth taxes targeting businesses and savers. Both options may worsen the economy. A better approach would involve a consensus on spending restraint alongside efforts for pro-growth regulatory reforms.
The latest borrowing figures underline what many of us already thought - that the government is almost certain to announce another set of tax increases at the Autumn Budget.
Given the country's deepening economic malaise, high borrowing costs, and the government's failure to implement even minor spending cuts, it is hard to see another way out.
I expect that tax allowances and thresholds will continue to be frozen for years to come, even as inflation remains above target.
The better approach would be to build a consensus renewed spending restraint, while also making a much more concerted effort to pursue cost-free, pro-growth regulatory reforms.
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