Reeves to repeat ‘once in a parliament’ Budget raid, City predicts

Core Viewpoint - The Chancellor Rachel Reeves is expected to propose a record-equalling tax-raising Budget of £41.7 billion, despite previous assurances that last year's £40 billion package was a one-off [1][2][3]. Tax Policy and Economic Forecasts - Barclays forecasts that the upcoming Budget will seek £41.7 billion in tax increases and spending cuts, similar to last year's £41.5 billion [1][4]. - The Office for Budget Responsibility (OBR) has downgraded productivity forecasts, contributing to expectations of substantial tax rises [3][4]. - There is a strong likelihood that the government may need to break its manifesto pledges regarding income tax, VAT, and National Insurance increases due to fiscal pressures [5][6]. Political Implications - Sir Keir Starmer, the Prime Minister, has refrained from reaffirming the manifesto pledge not to raise key taxes, indicating potential political challenges ahead [6]. - Discussions within the Labour party are ongoing regarding the political ramifications of breaking manifesto commitments on tax increases [5]. Household Financial Behavior - Households are preparing for potential tax rises by hoarding cash, with savings reaching £2 trillion for the first time, including £7.9 billion set aside in September [7].