Tax cuts have been mooted in recent months, but experts say they could now be less probable
Gilt yields – which refer to the interest on government bonds – have risen significantly, while US bonds have been caught up in a selling frenzy.
A higher outlook for inflation since the Budget last March means that the Government’s six-year freeze to income tax and national insurance thresholds is set to raise £40bn a year by the time it is fully rolled out in 2027-28, according to analysis from the Resolution Foundation.: “I would expect all governments running large deficits to try and bring them down. In the UK it makes tax cuts before the general election even less likely.
“The UK is paying over £100bn to service debt, and with gilts rising as interest rates remain high that is only going to go up. And it’s already a crazy number” he said. “They can’t up spending, and they can’t drop tax. In fact, really they might need to raise taxes, but that is unpopular and also damages the economy because people have less money to spend.”
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