Rabbit Reeves in the headlights of a coming fiscal crisis

HAVING been fed the possibility of every tax rise under the sun, yesterday's Budget may have seemed a bit of a relief.

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Starmer could soon lose patience with his unpopular Chancellor Rachel Reeves

There was no manifesto-breaking rise in rates of income tax, nor an increase in VAT. A new council tax premium will hit homes above £2million, but spare people lower down the property ladder.

The Budget season was a triumph of what in politics they call "expectations management" - condition people to think that things are going to be really bad, then when they turn out to be merely bad you hope that voters will be pathetically grateful. But if Rachel Reeves thinks she will be off the hook after yesterday's performance she will be sadly disappointed.

Nothing will disguise the pain that £26billion worth of tax rises is going to cause millions of taxpayers.

The freezing of income tax thresholds for another three years might not technically break Labour's manifesto promises. But, thanks to inflation, it will mean that, year on year, ever less of our income will be spared tax and ever more people will be dragged into higher tax rates.

The higher inflation - and the OBR raised its forecasts for inflation yesterday - the worse the effect of freezing tax thresholds becomes.