The British Labor Government announces one of the largest tax increases in 14 years

Reeves, who had already warned of the “difficult decisions” the government has had to make, announced a package that includes tax increases and Spending cuts worth approximately €47.8 billionwith the goal of addressing the urgent economic problems facing the nation, making it one of the budgets with the largest tax increases outside of a period of recession.

The head of the Economy blamed the crisis inherited from conservative governments, whose public finances she described as “fictitious.” Reeves criticized the previous government for failing to adequately budget compensation costs for the Post Office blood scandals and Horizon case. “The black hole in our public finances this year, which is repeated every year, the compensation they did not fund and their failure to assess the magnitude of the challenges facing our public services mean that this budget increases taxes by 40 billion pounds (47.8 billion euros)», he stated.

Minimum wage increase

Among the key announcements, he confirmed that the minimum wage will increase in April of next year by 6.7%, reaching 14.6 euros per hour, and detailed an increase in Social Security contributions for employers, which will increase by 1.2 percentage points, reaching 15% from April. This change is expected to generate an additional €29.9 billion. «I know this is a difficult choice. “I do not take this decision lightly,” the minister declared, recognizing the burden that these measures can impose on companies.

Additionally, he raised the lowest rate of capital gains tax from 10% to 18%, and the highest rate from 20% to 24%. However, capital gains tax rates for residential properties will remain at 18% and 24%. It will also extend the freezing of inheritance tax thresholdsallowing you to inherit up to 388,370 euros tax-free.

Reeves, who asserted that the United Kingdom voted for change and that the Labor Party government has a mandate for a decade of “national renewal”, promised “more pounds in people’s pockets” and better standards of living, highlighting that The only way to boost economic growth is to “invest, invest, invest.” Thus, he announced a increase of 27,000 million euros in the health budgetand 8,000 million for Education, which includes 1,670 million for the reconstruction of schools. The minister highlighted the need for more public investment, which is why, she said, 1.2 billion will be invested in the aerospace sector, 2.4 billion in the automobile sector, and 7.3 billion in sectors such as engineering and biotechnology.

The opposition accuses of “breaking” promises

The reaction of the opposition came with the speech of the still leader of the Conservative Party, Rishi Sunakwho claimed that Keir Starmer’s government had “manipulated the figures” and that taxes had reached record levels. Sunak stressed that the current situation is better than the one the Conservatives inherited in 2010 and accused Starmer of breaking promises, pointing out that the budget is full of “broken promises.” In addition, he questioned the alleged existence of a £22 billion “fiscal hole”, and stressed that the economy will be more exposed to future “shocks” due to the Labor government’s decisions and that tax increases on jobs and companies “ “They will hinder growth.”

The former prime minister emphasized that the increase in National Insurance contributions breaks the promise not to raise taxes on workers, and refuted claims about the poor economic situation they inherited, describing them as “nonsense.” He highlighted that inflation has returned to the 2% targetthat unemployment is low and that the UK is the fastest growing advanced economy in the world. Furthermore, he denounced that “never in the history of our country will taxes be higher than under this Labor government.”