Rachel Reeves drops another huge hint she is set to batter Brits with tax hikes | Personal Finance | Finance

Rachel Reeves has dropped a huge hint she will batter Brits with tax hikes in the upcoming Budget. The Chancellor said the Government will aim for “sufficient headroom” to protect the UK economy, but this buffer has led to speculation about aggressive tax action at the Budget.

On Monday at an event in Riyadh, where she is holding talks with Saudi Arabian government officials, the Chancellor said growth was a “big part” of the Budget, but added: “We are looking, of course, at tax and spending to ensure that we both have resilience against future shocks by ensuring we’ve got sufficient headroom, and also just ensuring that those fiscal rules are adhered to.”

Building in more headroom could mean raising income tax—a breach of Labour’s election manifesto—and less spending could lead to re-attempting to slash the welfare bill, reports The i Paper.

However, Ms Reeves promised not to break the fiscal rules, adding: “The underpinning for economic growth is stability and I’m not going to break the fiscal rules that we’ve set.

“We are going to reduce that primary deficit, we are going to see debt starting to fall as a share of GDP, because we need more sustainable public finances, especially in the uncertain world in which we live today.

“So, growth will be a big part of that Budget story, in a way that, frankly, I think growth has been neglected as a tool of fiscal policy in the last few years.”

At last year’s Budget, Reeves gave herself a buffer of £9.9billion against its fiscal rules, which are self-imposed limits they set against decisions on public spending, tax and borrowing.

However, it has been speculated that this multi-billion-pound buffer has been wiped out, meaning Ms Reeves may have to impose tax hikes.

As Labour promised in its 2024 manifesto not to raise income taxes, VAT, sales tax, and corporation tax, speculation has shifted towards tax hikes on pensioners.

This has led to heightened anxiety, causing a surge in pensioners withdrawing their savings, transferring gifts to relatives and buying second homes, according to wealth management experts.

It comes after comments earlier this month when Ms Reeves again pointed towards further tax hikes, stating: “In a world as volatile as it is today, having a bit more of a buffer can help absorb shocks.”