Starmer's In-Tray PM Faces Formidable Obstacles, From Tax and Migration to Trump

As Keir Starmer returns from his summer break in Europe, and Labour MPs head back to Westminster, the government will be hoping to get on the front foot after a tumultuous few months.

- Pippa Crerar

The recess has given them time to think, and to plan, but also the chance to study the polls. This week, YouGov put them on just 20% - Labour's lowest level in more than five years - and eight points behind Nigel Farage's Reform UK.

Already bruised by internal rows, public criticism and a failure to get a grip of big issues such as the economy and migration, Starmer's government desperately needs to reassert itself and gain some momentum. But there are lots of difficult moments ahead.

The budget

When Labour's former shadow chancellor Anneliese Dodds told the Guardian at the start of the summer that the Treasury should consider a wealth tax to close the growing gap in the public finances, Rachel Reeves was unequivocal. "I think we've got the balance right in terms of how we tax those with the broadest shoulders," she said, citing higher levies on private jets, on second homes, and increased capital gains tax, as well as scrapping non-dom status.

Yet the chancellor is now in a trickier position, with experts suggesting the spending gap is on course to reach more than £40bn after a slowdown in economic growth and higher-than-expected inflation. With extra borrowing likely to spook financial markets and ministers already struggling to stay within departmental spending limits - and Reeves determined to stick to her fiscal rules - the chancellor returns to work pondering which tax rises would be the least unpalatable option.

Labour has already ruled out putting up income tax, national insurance or VAT - which could have raised billions - to stick to a manifesto promise. The Treasury has spent the summer flying kites to test different options - including raising more money from inheritance tax and putting up capital gains tax on expensive homes. But wherever she lands, Reeves has a tough task explaining tax rises to the public. The chancellor is already considering delaying the budget until November to give her more time.