Brexit has had ‘severe and long lasting’ impact on economy, says Reeves, as she confirms budget tax rises – UK politics live | Politics
Check out our latest products
![[Upgraded] USB Computer /Laptop Speaker with Stereo Sound & Enhanced Bass, Portable Mini Sound Bar for Windows PCs, Desktop Computer and Laptops](https://m.media-amazon.com/images/I/61NAayKmVIL._AC_SL1500_.jpg)
Key events
Shadow chancellor Mel Stride claims UK in ‘tax doom loop’ and Reeves to blame
In his Sky News interview with the chancellor, Sam Coates put it to her that the UK was in a “doom loop” where the government needed to come back every year with higher taxes to fill a black hole in the public finances. Rachel Reeves replied: “Nobody wants that cycle to end more than I do, Sam.”
But, when Coates asked her if she could rule out having to put taxes up again in 2026, Reeves just avoided the question, telling him:
Our economy is doing well. I recognise that the cost of living challenges are still very real for people. In the last parliament, living standards fell. That’s the first time that’s ever happened. Living standards are rising today because of the increases in the national living wage, the national minimum wage, and because inflation and interest rates are lower than they were under the previous government.
Is there more to do? Absolutely, but I will never take risks through the public finances because when you do, it is ordinary people that pay the price.
In truth, no chancellor would rule out tax increases 13 months ahead of a budget, and so the fact that Reeves did not answer the question is meaningless. (But I quoted her words anyway because they tell you something about the story she wants to tell about the economy.)
In a post on social media, Mel Stride, the shadow chancellor, has claimed the UK is in a doom loop, and Reeves is to blame. He says:
Last year Rachel Reeves raised taxes by £40 billion. She said she wouldn’t come back for more. Now the Chancellor has confirmed she’s about to break her promise.
Rachel Reeves doesn’t need to raise taxes. She needs to get a grip of government spending – including the welfare bill.
Be in no doubt, this tax doom loop is down to the Chancellor’s economic mismanagement.
Under Rachel Reeves we have seen inflation double, debt balloon, borrowing costs at a 27-year high, and taxes up – with more pain on the way in the autumn.
A theme is emerging: when the numbers don’t add up, it’s never Rachel Reeves’ fault – but it’s always your family that pays the price.
Pressure on Downing Street to release evidence in collapsed China spy case
Downing Street is under pressure to publish its evidence in the collapsed China spy case after the Crown Prosecution Service denied having blocked its release, Emine Sinmaz reports.
Brexit has had ‘severe and long lasting’ impact on economy, says Reeves, as she confirms taxes to rise in budget
Good morning. In a much-praised FT column yesterday, Stephen Bush argued that one problem facing the Conservatives today is that “an essential condition for entry into the upper echelons of [the party] is being willing to at least pretend that you think taking Britain out of the EU was a good idea”. As Bush memorably put it, “this is a never-ending lobotomy for the Tories”.
But, to a much lesser extent, Labour has also had a problem with Brexit truth telling. At the last election Keir Starmer knew that he would only win with the support of people who voted to leave the EU in 2016 and as a result Labour avoided any language on Brexit that implied that this group might have been wrong.
Gradually that is changing and at the weekend the Times ran a story saying that Starmer and Rachel Reeves plan to make the argument that, with a downgrade in productivity forecasts set to necessitate huge tax rises in the budget, this will be at least in part due to Brexit. In their story Steven Swinford and Oliver Wright said:
Starmer and Reeves are expected to argue that, if it hadn’t been for Brexit, this type of downgrade would not have been needed, and to cite official figures suggesting that if Britain had not left the European Union the economy would be about £120bn bigger by 2035 than current forecasts suggest it will be.
The message is simple: [Nigel] Farage is ultimately to blame as the man who delivered Brexit with “easy sloganeering” then walked away from the aftermath rather than putting in the hard yards. Or, to put it another way: Farage, not us, is responsible for putting up your taxes.
Referring to the story, Wes Steeting, the health secretary, told a book festival at the weekend: “I’m glad that Brexit is a problem whose name we now dare speak.”
This morning Sky News has broadcast an interview with Reeves, who will be in Washington today for IMF and World Bank meetings, and Sam Coates asked her if it was true that the government is now blaming Brexit for the anaemic productivity figures that have led to the Office for Budget Responsibility warning Reeves she will have to raise more tax. Reeves replied:
Austerity, Brexit, and the ongoing impact of Liz Truss’s mini-budget, all of those things have weighed heavily on the UK economy. Already, people thought that the UK economy would be 4% smaller because of Brexit. Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year … but there is no doubting that the impact of Brexit is severe and long lasting and that’s why we are trying to do trade deals around the world, US, India, but most importantly with the EU.
“Severe and long lasting” is stronger than the language that Reeves normally uses when talking about the negative impact of Brexit. The Times were probably onto something.
In the interview Reeves also confirmed that tax rises are coming in the budget. (Asked if tax rises were coming down the track, she replied yes before swiftly moving on.) Perhaps more surprisingly, she also implied she is looking at potential spending cuts. “Of course, we’re looking at tax and spending as well,” she said at another point.
Graeme Wearden has more on Reeves at the IMF on his business live blog.
Will the Reeves interview come up at PMQs? Probably not. Instead, Kemi Badenoch is likely to challenge Starmer over the collapse of the China spy prosecution. With the CPS now saying it has no objection to the release of the three witness statements the government prepared ahead of the trail, Starmer is under pressure to either publish them – or come up with a decent reason why he can’t.
Here is the agenda for the day.
10.30am: The high court starts hearing a claim by Epping Forest council saying the Bell hotel in Epping should not be used to house asylum seekers. (This is the main case; legal action earlier this year only focused on the narrow issue of whether asylum seekers should be allowed to stay in the hotel, or have to leave, before the main hearing.)
Morning: Ruslan Stefanchuk, chair of the Ukrainian parliament (their equivalent of the Speaker), gives a speech to MPs and peers, before attending PMQs.
Noon: Keir Starmer faces Kemi Badenoch at PMQs.
Afternoon (UK time): Rachel Reeves is in Washington for IMF meetings where she is expected to speak to the media.
If you want to contact me, please post a message below the line when comments are open (normally between 10am and 3pm BST at the moment), or message me on social media. I can’t read all the messages BTL, but if you put “Andrew” in a message aimed at me, I am more likely to see it because I search for posts containing that word.
If you want to flag something up urgently, it is best to use social media. You can reach me on Bluesky at @andrewsparrowgdn.bsky.social. The Guardian has given up posting from its official accounts on X, but individual Guardian journalists are there, I still have my account, and if you message me there at @AndrewSparrow, I will see it and respond if necessary.
I find it very helpful when readers point out mistakes, even minor typos. No error is too small to correct. And I find your questions very interesting too. I can’t promise to reply to them all, but I will try to reply to as many as I can, either BTL or sometimes in the blog.
