UK Taxes Rise by £26 Billion in Day of Budget Chaos

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Transcript

00:00Just as UK Chancellor Rachel Reeves was about to take to the dispatch box to deliver her 2025 autumn budget,

00:06a leak from the Office for Budget Responsibility, the Independent Fiscal Watchdog,

00:10basically telling us what was going to be in the Chancellor's budget.

00:14Well, let's start with the good news.

00:16It said that her headroom had doubled to nearly £22 billion.

00:21That's good news, but beneath that, not a lot of good news.

00:25Growth downgraded, the welfare bill still soaring,

00:28living standards to rise more slowly than expected,

00:32and the tax burden rising to its highest since records began,

00:36just after World War II, 38% of GDP.

00:40Now, a lot of this tax rise is going to come from a stealth tax rise,

00:44the Chancellor freezing personal tax thresholds,

00:47and that's set to create millions of new taxpayers and higher-rate taxpayers.

00:53Reeves says that's fair, but we'll see how it plays out politically.

00:56Many already asking whether effectively that means the Chancellor has broken her manifesto pledge not to raise income tax.

01:04There was a bit of good news for the left wing of her party in that she removed the two-child benefit cap,

01:09potentially lifting hundreds of thousands out of poverty.

01:13And crucially for markets, she said altogether this budget is going to bring down inflation.

01:19But the gamble here is whether the market buys the backloading of fiscal tightening.

01:25You saw gilt yields falling during the speech and off the back of that OBR leak.

01:30You saw the pound rising against the dollar.

01:33But with Thanksgiving following this budget,

01:35UK gilts will be incredibly exposed to international cross-currents.

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01:57要 Tax will ground sight on the border without further ado.