Taxes to rise again despite growth, warn economists

A group of economists have warned that the Treasury is likely to raise taxes even further this year, despite an expectation that the country will return to growth in 2025.

- MILLIE COOKE

A Financial Times survey of 96 leading economists found that, while the UK is likely to outperform France and Germany in 2025, previously announced tax rises could undermine the economy.

It comes after the chancellor unveiled a record £40bn worth of tax rises in the autumn Budget, including an increase to employers’ national insurance contributions.

Most of the economists surveyed expected a low rate of economic growth this year, less than the 2 per cent rebound the Office for Budget Responsibility forecast for 2025. A major survey by the Confederation of British Industry (CBI) last month found firms are expecting to reduce both output and hiring, adding to the wider picture of a jittery economy.

The chancellor’s hike to employers’ national insurance, which is expected to rake in around £25bn a year, was highlighted by the CBI as one of the reasons for the gloomy outlook. Alpesh Paleja, the CBI’s interim deputy chief economist, warned the economy is “headed for the worst of all worlds”.