Budget blow for Reeves as UK's growth forecast slashed

"Rachel Reeves has been dealt a huge blow by the budget watchdog over plans to slash estimates on a key economic indicator for the UK intensifying fears she will need to dramatically hike taxes. On the eve of a difficult Labour Party conference in Liverpool, The Independent can reveal that the chancellor has been told the Office for Budget Responsibility (OBR) will substantially reduce its estimates for productivity in the economy which will lead to even lower economic growth."

"It means the chancellor will need to find even more money to balance the books, just weeks before her crucial Budget in November, putting further strain on the manifesto commitment not to raise one of the three big taxes income tax, VAT or national insurance contributions from employees. She will also be left with a budget deficit in 2030 which, economists warn, mean she has to raise taxes even higher than previously thought."

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Chancellor Rachel Reeves faces a major setback as the Office for Budget Responsibility plans to slash productivity estimates, lowering projected economic growth. Reduced productivity forecasts will force the chancellor to identify additional revenue to balance the books before the November Budget. The weaker outlook increases the likelihood of breaching the manifesto pledge not to raise income tax, VAT or employee national insurance. Economists warn the revised projections leave a budget deficit in 2030, potentially necessitating higher tax rises than previously anticipated. The chancellor is urging the OBR to attribute the downgrade to fourteen years of Conservative government and earlier optimistic estimates.

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