- SJP’s Hetal Mehta warns manifesto pledges will ‘severely restrict’ Chancellor
Measures announced in Chancellor Rachel Reeves’ upcoming Autumn Budget are unlikely to be enough to fill the so-called fiscal black hole, St James’s Place’s chief economist has warned.
Speaking on Thursday, Hetal Mehta claimed that ‘whatever fiscal package the Chancellor comes up with is likely to be insufficient’ to balance the books.
The Chancellor faces tough decisions on 24 November as she weighs Labour’s manifesto pledges with the urgent need to get Britain’s finances in order.
Mehta said commitment to Labour’s manifesto pledges will ‘severely restrict the Chancellor’s ability to get ahead of any kind of economic deterioration or fiscal holes opening up again’.
Labour’s 2024 general election manifesto promised to prioritise wealth creation and economic growth, promising no increases to income tax, employee National Insurance or VAT.
And the Government says its election manifesto is ‘non-negotiable and will apply to every decision taken by a Labour government.’
In 2024’s Autumn Budget, Labour brought in a raft of tax changes, hiking capital gains tax and announcing that pensions will be pulled into the inheritance tax net from 2027
Last year’s Autumn Budget saw Labour increase National Insurance contributions for employers, rather than employees, to 15 per cent.
However, with a £20billion black hole in the government’s finances, and hopes of adding £10billion worth of ‘fiscal headroom’, Reeves needs to find £30billion from her autumn budget measures.
Mehta said: ‘Some of the measures being talked about, and things that could still be looked at – none of them on their own really quite [fill the fiscal black hole].
‘The sorts of numbers that they are looking at are maybe £5billion here, £5billion there. But you’re looking at a hole up to £30billion.
‘Something has to give, whether it is the fiscal rules or the manifesto pledges.’
Mehta expects the Chancellor’s focus to be on boosting the Treasury’s tax take, but warns Reeves risks making overly complicated changes that will fail to raise the money that the Government needs.
In 2024’s Autumn Budget, Labour brought in a raft of tax changes, hiking capital gains tax and announcing that pensions will be pulled into the inheritance tax net from 2027.
‘I’ve long been an advocate for simplifying tax changes,’ she said.
Mehta said: ‘One to two pence on income tax would be easier to explain to the electorate, rather than all of these small measures.’
‘So you have to yank all of those levers really hard to generate anywhere near the kind of tax revenue that would be needed.’
Budget speculation, she said, is at ‘fever pitch already’.
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .