Humiliation for Rachel Reeves as she’s told she’s blown a £57bn hole in the UK economy
Rachel Reeves‘ impact on the UK economy threatens to blow a £57billion hole in Britain’s public finances, a thinktank has warned. The National Institute of Economic and Social Research (NIESR) said the Chancellor’s plans have undermined business confidence and growth much more than US President Donald Trump‘s tariffs.

According to NIESR, the impact of Mr Trump’s trade war is expected to reduce Britain’s economic growth by 0.1 percentage points. But it said the harm caused by the Labour Government’s tax hikes and uncertainty were causing more damage. Benjamin Caswell, an economist at NIESR, said: “Tariffs have engendered a lot of uncertainty, but I don’t think that should take the Government off the hook.

There has been a lot of uncertainty engendered through the Spring Statement and through some of the Budget measures.”

He told the Telegraph that fears of further tax increases in the autumn are also holding the economy back, with firms “playing a wait-and-see game”.

This means businesses are scaling back capital expenditure and recruitment with vacancies dropping “very dramatically”, according to the expert.

Mr Caswell explained that on the back of the weaker economic outlook NIESR is projecting lower tax receipts which it said would mean the Government won’t meet either of its fiscal rules.

NIESR warned Ms Reeves would miss her rule to pay for day-to-day spending via tax receipts by £57.1bn. She is also set to fall £24.9bn short of her aim to reduce net financial debt as a share of GDP, according to the thinktank.

Mr Caswell said this would force Ms Reeves to cut spending or raise taxes if she wants to stick to the “iron clad” rules she created last year.