Blow to Reeves as experts warn of 'inevitable' tax rises

Chancellor Rachel Reeves has suffered another blow after unexpectedly high borrowing figures led to warnings that tax rises in November's Budget now look “inevitable”.

- KATE DEVLIN KARL MATCHETT

The highest August borrowing for five years outstripped predictions at £18bn, £3.5bn more than in August 2024, according to the Office for National Statistics (ONS). Soaring interest on government debt also wiped out any boost from Ms Reeves's controversial national insurance tax raid unveiled at last year's Budget, according to the ONS.

Martin Beck, chief economist at research and policy firm WPI Strategy, said: "The £10bn buffer the chancellor pencilled in against her key fiscal rule in March has almost certainly gone. That means tax rises in November look inevitable."

The chancellor has already admitted that the economy is “not working well enough”, as she pledged to get a “tight grip” on spending when she delivers her budget on 26 November.

Even before this latest blow, The Independent was told she is considering a new tax raid by raising capital gains tax and introducing a gambling levy to help close an estimated £40bn black hole in her budget.