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Shadow chancellor Mel Stride claims UK in ‘tax doom loop’ and Reeves to blame<\/p>\n
In his Sky News interview with the chancellor, Sam Coates put it to her that the UK was in a \u201cdoom loop\u201d where the government needed to come back every year with higher taxes to fill a black hole in the public finances. Rachel Reeves replied: \u201cNobody wants that cycle to end more than I do, Sam.\u201d<\/p>\n
But, when Coates asked her if she could rule out having to put taxes up again in 2026, Reeves just avoided the question, telling him:<\/p>\n
Our economy is doing well. I recognise that the cost of living challenges are still very real for people. In the last parliament, living standards fell. That\u2019s the first time that\u2019s ever happened. Living standards are rising today because of the increases in the national living wage, the national minimum wage, and because inflation and interest rates are lower than they were under the previous government.<\/p>\n
Is there more to do? Absolutely, but I will never take risks through the public finances because when you do, it is ordinary people that pay the price.<\/p>\n
In truth, no chancellor would rule out tax increases 13 months ahead of a budget, and so the fact that Reeves did not answer the question is meaningless. (But I quoted her words anyway because they tell you something about the story she wants to tell about the economy.)<\/p>\n
In a post on social media, Mel Stride, the shadow chancellor, has claimed the UK is in a doom loop, and Reeves is to blame. He says<\/a>:<\/p>\n Last year Rachel Reeves raised taxes by \u00a340 billion. She said she wouldn\u2019t come back for more. Now the Chancellor has confirmed she\u2019s about to break her promise.<\/p>\n Rachel Reeves doesn\u2019t need to raise taxes. She needs to get a grip of government spending – including the welfare bill.<\/p>\n Be in no doubt, this tax doom loop is down to the Chancellor\u2019s economic mismanagement.<\/p>\n Under Rachel Reeves we have seen inflation double, debt balloon, borrowing costs at a 27-year high, and taxes up – with more pain on the way in the autumn.<\/p>\n A theme is emerging: when the numbers don\u2019t add up, it\u2019s never Rachel Reeves\u2019 fault – but it\u2019s always your family that pays the price.<\/p>\n Share<\/a>Pressure on Downing Street to release evidence in collapsed China spy case<\/p>\n Downing Street is under pressure to publish its evidence in the collapsed China spy case<\/a> after the Crown Prosecution Service denied having blocked its release, Emine Sinmaz reports.<\/p>\n Share<\/a>Brexit has had \u2018severe and long lasting\u2019 impact on economy, says Reeves, as she confirms taxes to rise in budget<\/p>\n Good morning. In a much-praised FT column yesterday<\/a>, Stephen Bush argued that one problem facing the Conservatives today is that \u201can essential condition for entry into the upper echelons of [the party] is being willing to at least pretend that you think taking Britain out of the EU was a good idea\u201d. As Bush memorably put it, \u201cthis is a never-ending lobotomy for the Tories\u201d.<\/p>\n But, to a much lesser extent, Labour has also had a problem with Brexit truth telling. At the last election Keir Starmer<\/a> knew that he would only win with the support of people who voted to leave the EU in 2016 and as a result Labour avoided any language on Brexit that implied that this group might have been wrong.<\/p>\n Gradually that is changing and at the weekend the Times ran a story saying that Starmer and Rachel Reeves plan to make the argument that, with a downgrade in productivity forecasts set to necessitate huge tax rises in the budget, this will be at least in part due to Brexit. In their story<\/a> Steven Swinford and Oliver Wright said:<\/p>\n Starmer and Reeves are expected to argue that, if it hadn\u2019t been for Brexit, this type of downgrade would not have been needed, and to cite official figures suggesting that if Britain had not left the European Union the economy would be about \u00a3120bn bigger by 2035 than current forecasts suggest it will be.<\/p>\n The message is simple: [Nigel] Farage is ultimately to blame as the man who delivered Brexit with \u201ceasy sloganeering\u201d then walked away from the aftermath rather than putting in the hard yards. Or, to put it another way: Farage, not us, is responsible for putting up your taxes.<\/p>\n Referring to the story<\/a>, Wes Steeting, the health secretary, told a book festival at the weekend: \u201cI\u2019m glad that Brexit is a problem whose name we now dare speak.\u201d<\/p>\n This morning Sky News has broadcast an interview<\/a> with Reeves, who will be in Washington today for IMF and World Bank meetings, and Sam Coates asked her if it was true that the government is now blaming Brexit for the anaemic productivity figures that have led to the Office for Budget Responsibility warning Reeves she will have to raise more tax. Reeves replied:<\/p>\n Austerity, Brexit, and the ongoing impact of Liz Truss\u2019s mini-budget, all of those things have weighed heavily on the UK economy. Already, people thought that the UK economy would be 4% smaller because of Brexit. Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year \u2026 but there is no doubting that the impact of Brexit is severe and long lasting and that\u2019s why we are trying to do trade deals around the world, US, India, but most importantly with the EU.<\/p>\n \u201cSevere and long lasting\u201d is stronger than the language that Reeves normally uses when talking about the negative impact of Brexit<\/a>. The Times were probably onto something.<\/p>\n In the interview Reeves also confirmed that tax rises are coming in the budget. (Asked if tax rises were coming down the track, she replied yes before swiftly moving on.) Perhaps more surprisingly, she also implied she is looking at potential spending cuts. \u201cOf course, we\u2019re looking at tax and spending as well,\u201d she said at another point.<\/p>\n Graeme Wearden has more on Reeves at the IMF on his business live blog.<\/p>\n Will the Reeves interview come up at PMQs? Probably not. Instead, Kemi Badenoch is likely to challenge Starmer over the collapse of the China spy prosecution. With the CPS now saying it has no objection to the release of the three witness statements <\/a>the government prepared ahead of the trail, Starmer is under pressure to either publish them \u2013 or come up with a decent reason why he can\u2019t.<\/p>\n Here is the agenda for the day.<\/p>\n 10.30am: The high court starts hearing a claim by Epping Forest council saying the Bell hotel in Epping should not be used to house asylum seekers. (This is the main case; legal action earlier this year only focused on the narrow issue of whether asylum seekers should be allowed to stay in the hotel, or have to leave, before the main hearing.)<\/p>\n Morning: Ruslan Stefanchuk, chair of the Ukrainian parliament (their equivalent of the Speaker), gives a speech to MPs and peers, before attending PMQs<\/a>.<\/p>\n Noon: Keir Starmer faces Kemi Badenoch<\/a> at PMQs.<\/p>\n Afternoon (UK time): Rachel Reeves<\/a> is in Washington for IMF meetings where she is expected to speak to the media.<\/p>\n If you want to contact me, please post a message below the line when comments are open (normally between 10am and 3pm BST at the moment), or message me on social media. I can\u2019t read all the messages BTL, but if you put \u201cAndrew\u201d in a message aimed at me, I am more likely to see it because I search for posts containing that word.<\/p>\n If you want to flag something up urgently, it is best to use social media. You can reach me on Bluesky at @andrewsparrowgdn.bsky.social. The Guardian has given up posting from its official accounts on X<\/a>, but individual Guardian journalists are there, I still have my account, and if you message me there at @AndrewSparrow, I will see it and respond if necessary.<\/p>\n I find it very helpful when readers point out mistakes, even minor typos. No error is too small to correct. And I find your questions very interesting too. I can\u2019t promise to reply to them all, but I will try to reply to as many as I can, either BTL or sometimes in the blog.<\/p>\n