Rachel Reeves is set to address key issues in a significant speech before the Budget, pledging to safeguard the NHS and enhance the standard of living for struggling individuals in the UK.
Facing a substantial financial gap of £20-30 billion, the Chancellor is preparing to make critical decisions that will have a lasting impact on the economy. This comes amid speculation that Reeves may increase income tax, deviating from Labour’s previous commitments.
In her upcoming Budget speech, Reeves will emphasize the importance of her choices in shaping the economy’s future. She will highlight the challenges faced and the rationale behind her decisions, aiming to secure a prosperous economic foundation for the nation.
One of the proposed measures to alleviate the cost of living is a potential reduction in the VAT rate on energy bills. By cutting the current 5% VAT on gas and electricity, households could save an average of £86 annually.
Moreover, the Resolution Foundation has advised Reeves to take decisive actions in the Budget to address public finances. Suggestions include raising income tax by 2p and simultaneously decreasing employee national insurance by 2p to mitigate the impact on working individuals.
James Smith, the research director at the Resolution Foundation, emphasized that such adjustments could generate significant revenue while safeguarding wages. The focus is on crafting a Budget that prioritizes economic stability, wage levels, and poverty alleviation, aiming to boost growth and steer away from financial deficits.
