From the first hour of this, the markets decided to forcefully punish the UK public debt and the pound for the first change of direction by the Prime Minister, Labor Keir Starmer and his economic team. A government acting with fear and uncertainty is being hit from all sides, and no matter how much Mr Starmer wants to camouflage his continued revisions as an example of wisdom, markets have interpreted what he communicates as indecision and opportunism.
The last Downing Street bandage worn by the diary on that July night financial times According to (FT), the decision was taken to abandon the announced income tax hike for the middle and upper classes. Economy Minister Rachel Reeves mentioned the tax increase in a speech last week. This was clearly a brave move, breaking his original election promise not to increase fiscal pressure, but was hailed by experts as a necessary response to alleviate the current imbalance in the public accounts, which stands at around 34 billion euros.
After all, the growing unpopularity of Starmer and his executive, which is making all MPs nervous, and the rising tensions in the face of the drumbeat of internal rebellion in the Labor caucus – whether real or imagined, which no one has yet realized – will precipitate a new turn and consequent crisis.
Sources from the Organization for Government Responsibility (OBR, an English acronym) cited by the FT said the Economy Ministry communicated the planned changes to institutions through what is technically called an “indication of relevant measures” as a preliminary and mandatory step before announcing the next assumptions on November 26. The Ministry does not wish to confirm or deny this information.
The OBR is an independent body that monitors and analyzes the viability and consequences of economic decisions adopted by governments. The verdict given each time an assumption is made gives you a stamp of credibility or creates reasonable doubt about the public account.
The cited sources confirmed that Minister Reeves decided not to implement the proposal made at the time by the Center for Economic Analysis, which was to increase taxes. resolution foundationvery close to the Labor government, baptized as Two Up Two Down (Dos Arriba, Dos Abajo).
It consisted of increasing the middle and high percentage points of tax on income (which Labor promised not to touch in its election plan) and reducing other contributions to social security for employees (in the UK tax system, national insurance). This result assumes that, in theory, the working class will decline stably, but that the decline in the fiscal balance will be significantly wider.
In Mr Reeves’ final proposals submitted to the OBR, the decision to backtrack on the climb is offset by a range of plans that do not satisfy experts, including raising the caps on some tax brackets to increase revenue, as well as raising stakes, stakes or property taxes. Luxury property.
In the face of the concerns, the government said its corrections were in response to a clear improvement in the OBR’s own forecasts, which had reduced estimated accounting losses by almost €15 billion. This morning the market calmed down slightly on average, and national interests regained some fortification. However, doubts have not been completely dispelled.
“Without an income tax increase, the remaining measures in this policy to balance the public purse will be far less reliable,” said Lee Hardman, chief financial analyst at MUFG. “The government gives the impression that it wants to prioritize its own popularity and domestic political stability in the face of fiscal stability.”
Reeves’s apparent leadership in defending fiscal orthodoxy, which has led to social cuts and austerity measures that have been deeply questioned within Labor’s caucus and within his own party, has become increasingly weak, despite the prime minister’s pledge to stay in power until the end of his term. Last July, while Starmer was trying to protect the council chambers from attacks from his own ranks, the council chambers showed how lolabas were operating in the council chambers.
All of this resulted in continued rollbacks of previously announced policies, both in terms of tax cuts and tax increases, and increased uncertainty.
internal threat
As is always the case in strong winds when direction is uncertain, Starmer’s team have spent the past week trying to exorcise any specters and fix the flaws in their own goal. Multiple media outlets carried reports emanating from those around the Prime Minister that Downing Street was prepared to face a possible challenge to the leader’s leadership. Starmer is going to fight, I guarantee you. He was appointed head of Wes Streeting, who is believed to be a co-conspirator with the Health Minister, and is increasingly regarded by Labor Party officials as a future government leader.
The minister’s response was a series of interviews on various television and radio stations, in which he negotiated his participation in the conspiracy, and at the same time demonstrated his political dignity and ability to enhance his status. Meanwhile, Mr Starmer had to apologize to Mr Streeting, publicly condemn filtration and try to defuse the situation.
Governments, with issues as sensitive as public finances and restless markets, find themselves in the uncomfortable position of having their hands tied when it comes to correcting their own missteps. “I cannot comment on speculation regarding possible fiscal changes,” he said, restricting his conversation to an Economy Ministry spokesperson. “Ministers will set out a set of premises that include fair measures to build strong foundations to secure Britain’s future,” he added, in a response that sounded as if his sole purpose was to get in the way.
Mr Starmer has succeeded in showing his weakness to voters who have seen no clear change in his five months in charge of Downing Street. Members of your party who are disappointed by the lack of resolve and the few policies left. And now on the market they are starting to smell blood.
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