Britain’s centre-left Labour government unveils its annual budget Wednesday, with expected tax rises to curb debt and fund public services threatening to further dent its weak poll ratings.
Prime Minister Keir Starmer has promised a “Labour budget with Labour values”, vowing to reduce National Health Service waiting times and ease a prolonged cost-of-living crisis.
But finance minister Rachel Reeves faces a challenge: shoring up Labour’s credibility with voters as hard-right Reform UK gains popularity, while convincing investors the government has its finances under control.
Economists estimate that Reeves, whose official title is chancellor of the exchequer, must find some £20 billion ($26 billion) to balance the books.
It could prove to be a tall order as Britain grapples with a deficit near five percent of gross domestic product, elevated inflation and a stagnating economy as unemployment climbs.
The yield on 30-year UK government bonds this year hit its highest level since 1998, with concerns growing about soaring state debt.
A bad market response to the budget meanwhile risks investors selling UK debt, making it more expensive for the government to borrow and finance its spending plans.
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