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| Warning higher borrowing costs may mean tax rises | Warning higher borrowing costs may mean tax rises |
| (about 8 hours later) | |
| Higher borrowing costs for the government may mean tax rises or spending cuts if it wants to stick to its own self-imposed rules, a leading economic think tank has warned. | Higher borrowing costs for the government may mean tax rises or spending cuts if it wants to stick to its own self-imposed rules, a leading economic think tank has warned. |
| According to a report from the Resolution Foundation, the government is spending £7bn a year more paying interest on its debt than it was at the time of the Budget. | According to a report from the Resolution Foundation, the government is spending £7bn a year more paying interest on its debt than it was at the time of the Budget. |
| As a result, the think tank said higher tax or cuts "may be needed" if the government wants to keep its promise not to spend more day-to-day than it brings in through tax. | As a result, the think tank said higher tax or cuts "may be needed" if the government wants to keep its promise not to spend more day-to-day than it brings in through tax. |
| A Treasury spokesperson told the BBC its commitment to its fiscal rules is "non-negotiable". | A Treasury spokesperson told the BBC its commitment to its fiscal rules is "non-negotiable". |
| The report comes after Chancellor Rachel Reeves revealed her plan to boost the economy through backing a series of infrastructure projects, including a third runway at Heathrow. | The report comes after Chancellor Rachel Reeves revealed her plan to boost the economy through backing a series of infrastructure projects, including a third runway at Heathrow. |
| Government borrowing costs began rising after the Budget last Autumn. | Government borrowing costs began rising after the Budget last Autumn. |
| The Resolution Foundation said the rise has been "primarily driven by international factors", with US and European government debt also rising. | The Resolution Foundation said the rise has been "primarily driven by international factors", with US and European government debt also rising. |
| Other economists have said higher borrowing costs are at least partly a reaction to sluggish growth in the UK economy. | Other economists have said higher borrowing costs are at least partly a reaction to sluggish growth in the UK economy. |
| The increase has been much lower than following the 2022 mini-Budget, and borrowing levels have fallen since hitting their highest levels in several years earlier this month. | The increase has been much lower than following the 2022 mini-Budget, and borrowing levels have fallen since hitting their highest levels in several years earlier this month. |
| However, the Resolution Foundation said the risk of the government of breaking its own fiscal rules "remains on a knife edge" because borrowing costs remain higher than in the Autumn. | However, the Resolution Foundation said the risk of the government of breaking its own fiscal rules "remains on a knife edge" because borrowing costs remain higher than in the Autumn. |
| Tax rises and 'waste' cuts | Tax rises and 'waste' cuts |
| Resolution Foundation research director James Smith said Chancellor Rachel Reeves will need to meet the fiscal rules "or risk further market jitters". | Resolution Foundation research director James Smith said Chancellor Rachel Reeves will need to meet the fiscal rules "or risk further market jitters". |
| "While the chancellor is rightly focused on fleshing out her long-term strategy for economic growth, tough short-term decisions, including fresh tax rises or spending cuts, may also be needed in the coming weeks to demonstrate her commitment to sustainable public finances," he added. | "While the chancellor is rightly focused on fleshing out her long-term strategy for economic growth, tough short-term decisions, including fresh tax rises or spending cuts, may also be needed in the coming weeks to demonstrate her commitment to sustainable public finances," he added. |
| The government has already said it wants to cut down on "waste" and has said tax rises might be a possibility. | The government has already said it wants to cut down on "waste" and has said tax rises might be a possibility. |
| Reeves said in December departments would be asked to identify 5% "efficiency savings" as part of a review to set their budgets for the coming years. | Reeves said in December departments would be asked to identify 5% "efficiency savings" as part of a review to set their budgets for the coming years. |
| "The chancellor has already shown that tough decisions on spending will be taken, with the spending review to root out waste ongoing," a Treasury spokesperson told the BBC. | "The chancellor has already shown that tough decisions on spending will be taken, with the spending review to root out waste ongoing," a Treasury spokesperson told the BBC. |
| Meanwhile, Prime Minister Sir Keir Starmer did not rule out more tax rises when asked by the BBC in December. | Meanwhile, Prime Minister Sir Keir Starmer did not rule out more tax rises when asked by the BBC in December. |
| "If you look at Covid and Ukraine, everyone knows there are things we can't see now, but I can tell you our intention was to do the tough stuff in that Budget, not keep coming back," he said. | "If you look at Covid and Ukraine, everyone knows there are things we can't see now, but I can tell you our intention was to do the tough stuff in that Budget, not keep coming back," he said. |
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