Britain will grow more slowly as a result of Rachel Reeves’s tax raid as higher public spending also keeps prices and interest rates higher for longer, the UK’s biggest business group has warned.
The Confederation of British Industry (CBI) downgraded its growth forecasts for this year and next as it blamed the Chancellor for piling pressure on households and businesses.
Its economists said they had been forced to tear up preliminary forecasts because of the magnitude of the raid, as the lobby group predicted an uptick in inflation that would keep inflation above the Bank of England’s 2pc target until at least 2026.
It came as the boss of one of Britain’s biggest investment platforms warned that Ms Reeves was not done raising taxes.
Michael Summersgill, chief executive of fund supermarket AJ Bell which has more than half a million customers, said: “The narrative ahead of this Budget was out of line with the Budget that was ultimately delivered.
“Do I think that there’s a risk that they come back and they look to raise more taxes through the course of this Parliament? Yes, I think there is.
“I didn’t see anything in the October Budget that was pro growth and pro investment and that concerns me.
“We had had some positive interactions with the Labour Party in the tail end of their time in opposition and in those early days in government. But it was a real tax-raising budget, and there were some very clumsy proposals in that October Budget, and that causes concern.”
The CBI now predicts the UK economy will grow 0.9pc this year and 1.6pc in 2025, down from predictions of 1pc and 1.9pc respectively at its previous forecast in June.
Read the latest updates below.
Thanks for joining us. We begin with new estimates from Britain’s biggest business lobbying group, which has cut its growth forecast for the UK in the wake of Rachel Reeves’s tax-raising Budget.
The Confederation of British Industry (CBI) said Britain’s economy would grow more slowly because the Chancellor’s tax raid will keep inflation over the Bank of England’s 2pc target until 2026.
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