Rachel Reeves may have to raise taxes or introduce further spending cuts in her October budget, leading economists have warned.
The Institute for Fiscal Studies (IFS), an economics-focused think tank, warned after her spring statement that Ms Reeves had left herself open to six months of “damaging speculation and uncertainty over tax policy”.
While the chancellor restored her £9.9 billion headroom of spending power with cuts made in the statement, the IFS warned the buffer is small by historic standards.
This risks the need for further cuts, or even tax rises at the autumn budget, if Ms Reeves is to adhere to her self-imposed fiscal rules to not borrow cash to pay for day-to-day public spending.
IFS director Paul Johnson said he was concerned pensions “look like a juicy place to go for a lot of money”.
“That risks months of speculation over what those tax rises might be – a raid on pensions, a wealth tax on the richest, another hike to capital gains tax?”
Ms Reeves has denied there would be further tax rises or spending cuts at the Budget in the autumn but stopped short of ruling them out entirely.
Starmer refuses to rule out further tax rises
Sir Keir Starmer said the decision not to increase tax at the spring statement “indicates the mindset” of the government when asked if there would be hikes in the autumn.
The prime minister declined to explicitly rule out the prospect of tax rises in the budget later this year, but said ministers had “kept good” to manifesto promises not to raise certain taxes.
He said: “The first thing to say is we haven’t raised tax in the spring statement, and I think at every press conference I did before yesterday, the challenge to me was, ‘you’re going to have to raise taxes in the spring statement, aren’t you?’
“And I said ‘wait ’til the spring statement’, we got the spring statement and we haven’t (raised taxes).
“What we’ve done is build on the stability that we need and to go further and faster on security and growth in what is undoubtedly a changed world.
“We did have manifesto commitments in relation to tax and what taxes we wouldn’t raise, and we kept good to those promises.
“Obviously, I’m not going to write future budgets – every prime minister and chancellor from every government always takes that position.
“But if you look at the pattern, if you like, or the intent for both the budget and the spring statement, you’ll see that when it comes to the decisions we’ve had to make, we have not taken the decision to increase tax, and I think that indicates the mindset that we bring to this.”
Starmer says all options ‘on the table’ in response to Trump’s latest tariffs
All options remain “on the table” for responding to tariffs, the Prime Minister has said in response to Donald Trump’s announcement of new levies on cars.
Sir Keir Starmer told a press conference in Paris: “Tariffs are very concerning, there’s no doubt about that, and I’m very clear in my mind that the sector, the industry doesn’t want a trade war.
“And that’s why first and foremost we have got to work with the sector, work with the industry in our response to this.
“I think we need to keep, as ever, pragmatic and clear-eyed. We are engaged, as you know, in intense discussions with the US on economic arrangements on a number of fronts, but including to mitigate tariffs, and we will continue in that way because I think that rather than jumping into a trade war it is better pragmatically to come to an agreed way forward on this, if we can, and that’s why we’re intensely engaging in the way that we are.
“But look, we always have to put the national interest first and that’s why I’ve also been clear that as we’ve engaged in those negotiations, those discussions, we will keep all options on the table.
“The industry doesn’t want a trade war, but it’s important we keep all options on the table.
“But I’m working hard with others to make progress on economic arrangements which I hope will better serve our country than a trade war which will not in my view.”
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Labour’s war on the poor will backfire badly – not least among its MPs
‘Russia is filibustering’: Starmer calls for Ukraine peace talks deadline
Sir Keir Starmer has accused Vladimir Putin of “filibustering” to delay Donald Trump’s peace talks.
He said: “They are playing games, and they’re playing for time. It is a classic from the Putin playbook.”
The prime minister said allies in Paris agreed “we should be setting a framework and a deadline of delivering real progress, and that we should hold them to that deadline”.
He added: “We’ve agreed that we must go further now to support the peace process, support Ukraine and increase the pressure on Russia to get serious.”
Defence secretary John Healey will chair the next Ukraine contact group meeting on 11 April to deliver “more military aid and keep Ukraine in the fight because peace comes through strength”.
The prime minister said allies had agreed to increase sanctions and bring Russia to the table “in days and weeks, not months and months”. He warned: “We are in the mood for deadlines.”
Sir Keir said the allies discussed a “full or partial ceasefire” leading to a “just and lasting peace”. He added: “That remains our shared goal.”
The UK, French and German chiefs of defence will meet in Ukraine to discuss support for Kyiv. Sir Keir said: “The coalition of the willing is stronger and broader than it’s ever been.”
He added: “This will require the engagement and support of the United States,” but insisted allies are “more resolute today” than in recent weeks.
Follow our coverage of the Ukraine war below:
Labour MP asks if government can ‘find a lost moral compass’ after aid cuts
A Labour MP has asked if the government can rediscover its moral compass after aid cuts.
Barry Gardiner (Brent West) said he was unhappy aid had been reduced to 0.3% of GDP in order to fund higher defence spending.
Mr Gardiner said: “I was proud to serve in this House when Tony Blair and Gordon Brown established the department for international development and when they established the ‘drop the debt’ campaign.
“I was proud when the leader and I stood on a manifesto which committed us, promised that we would restore the international aid budget to 0.7% of GNI. So could we have a debate please in Government time on how it may be possible to find a lost moral compass.”
Commons leader Lucy Powell said: “We all share the pride that the previous Labour government did in the area of debt reduction and aid for some of the poorest countries across the world. We’re also proud that we have a commitment which remains to returning our aid budget to 0.7% of GDP.”
Ms Powell then referred to the statement to the Commons by Sir Keir Starmer announcing the extra defence spending and aid budget cut. She added: “We remain absolutely committed to returning the aid budget to the 0.7% levels we said.”
Downing Street says government has made ‘generous offer’ to British Steel
Downing Street said the Government had made a “generous offer” to British Steel.
The Prime Minister’s official spokesman said: “We’ve made a generous offer to British Steel designed to deliver a sustainable future for staff, industry and the local community… we’ve got a two and half billion-pound plan to rebuild the sector.
“We will continue to work with British Steel and with the company’s owners to secure its future and deliver a good outcome.
“But we’ve made that offer and that’s obviously up to the company involved.”
For context,
British Steel, the second-largest producer in the country, has launched a redundancy consultation on shutting two blast furnaces in Scunthorpe. More than half of the company’s 3,500-strong workforce could potentially be impacted.
The full report below:
Downing Street ‘disappointed’ by US car tariffs and vows to protect national interest
Downing Street said the UK was “disappointed” by the US decision to impose tariffs on the car industry and would “not hesitate to respond in the national interest”.
But Number 10 said Britain was seeking a “pragmatic approach” with ongoing “productive” discussions about a wider economic deal.
The prime minister’s official spokesman said: “We are obviously disappointed by the US decision to impose global tariffs on the auto industry, and I think, as we said previously, we’ll keep all options on the table and we’ll always take a position that protects the national interest.
“But also as we’ve said we’re taking a pragmatic approach to our discussions with the United States. We continue to have productive discussions on securing a wider economic deal.
“These conversations are ongoing and are going to continue.”
Asked whether the prime minister was worried the UK looked weak, he said: “We’re going to keep all options on the table and will never hesitate to respond in the national interest, but we’re taking a pragmatic approach.”
Starmer backs Reeves’ claim welfare reforms won’t push people into poverty
Sir Keir Starmer agrees with Rachel Reeves’ assertion that the Government’s welfare reforms will not push people into poverty, Downing Street said, despite an impact assessment estimating hundreds of thousands would be.
The Prime Minister’s official spokesman said: “Of course the Prime Minister shares the sentiment the Chancellor expressed this morning.
“The whole point of this Government’s agenda is to boost living standards and get people back to work so that people are less likely to be in poverty.”
Reynolds leaves door open to changes in digital services tax for US deal
Jonathan Reynolds declined to rule out changing or scrapping the digital services tax (DST) in exchange for exemptions from US tariffs, saying the tax was not something that “can never change”.
Asked whether he would rule out scrapping the tax on tech firms, the Trade Secretary said: “Tech companies paying a fair amount of tax in the UK is something that is incredibly important to us, and I think the British people.
“You will know that DST was introduced as a temporary measure in lieu of an international agreement.”
He added: “We have always been of the view as a country that this has to be something ideally agreed on an international basis, but it’s not that DST has been put in place as something that can never change or we can never have a conversation about it.
“So we are both committed to making sure tech companies pay a fair amount of tax in the UK, for their economic activity in the UK, but we understand the US has cited, as it has to countries around the world, concerns about the specific structure of that.
“So in terms of this conversation, they will want to talk to us about that, it’s not a major part of the conversation though I understand it’s obviously newsworthy given the prominence of all tech companies in our lives, but let’s remember what is our objective as a country here, it’s that fair rate of tax.
“But we have always been willing, the whole point of this was to do that on an international basis.”
Full report | Wealthy and pensioners at risk of new tax raid in autumn Budget, experts warn
Our Whitehall Editor Kate Devlin reports:
