2h ago
07.53 GMT
Introduction:
IMF hails Reeves’ ‘sustainable’ tax rises; Resolution Foundation says budget
marks ‘decisive shift from planned cuts’
Good
morning. The International Monetary Fund (IMF) has welcomed the measures
announced by Rachel Reeves in her budget yesterday.
In an
unusual move, the influential Washington-based financial watchdog backed the
increases in investment and spending on public services as well as
“sustainable” tax rises. A spokesperson said:
We support
the envisaged reduction in the deficit over the medium term, including by
sustainably raising revenue.
Last night,
a spokesperson said the fund welcomed the government’s “focus on boosting
growth through a needed increase in public investment while addressing urgent
pressures on public services.
The
Resolution Foundation, a UK thinktank, has published its analysis of the budget
and given it a guarded welcome. It said the UK budget has delivered “short-term
living standards pain in the hope of long-term growth-based gains”.
The
London-based foundation said the first Labour budget in nearly 15 years marked
a “decisive shift” from the planned cuts set out by the last government, with
better-funded public services and greater public investment coming from higher
taxes and more borrowing.
But the
budget has not yet delivered a decisive shift away from Britain’s record as a
‘stagnation nation’, with the outlook for growth and living standards remaining
weak in this Parliament.
By
prioritising extra spending on public services and investment, the chancellor
is borrowing an extra £32bn a year by the end of the parliament, with another
£41bn coming from tax rises.
Mike Brewer,
interim chief executive of the Resolution Foundation, said:
Rachel
Reeves’s first ever Budget was never going to be a crowd-pleaser, given the
profound and often conflicting challenges she faced, from failing public
services to perilous public finances, weak growth and stagnating living
standards.
The
short-term effect of these changes will be better funded public services – not
just across schools and the NHS – but, critically, also in our justice system.
But families are also set for a further squeeze on living standards as the rise
in employer National Insurance dampens wage growth.
With Britain finally turning the page on its longstanding failure to invest thanks to a £100bn boost to public capital spending, the hope is that this short-term pain will eventually turn into a long-term living standards gain. But if it doesn’t, future budgets won’t be any easier to deliver, especially if further tax rises are needed
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