Chancellor Rachel Reeves has been warned that the cash left to give her room to manoeuvre with the public finances could be eaten up by Donald Trump’s huge tariff announcement
Rachel Reeves says she won’t raise taxes on working people
Rachel Reeves has said working people will see “no rise in taxes in their pay slips” amid swirling concerns her wiggle room at the Treasury will run out.
Economists have warned the Chancellor that the cash left to give her room to manoeuvre with the public finances could be eaten up by Donald Trump’s huge tariff announcement. It has raised fears she could be forced to hike taxes or cut public spending at the next Budget in the Autumn.
But, for the first time since the US President’s bombshell move, Ms Reeves has reassured the public that she will not raise taxes on workers. “W orking people will see no rise in taxes in their pay slips, whether that’s their national insurance, income tax, or indeed their VAT, or fuel duty,” she told broadcasters.
British businesses are facing a double whammy of 10% tariffs on all British products sold to the US and an increase in employers’ National Insurance Contributions (NICs). Asked if one of the best ways to negate the impact of tariffs was to reverse the NICs hike, Ms Reeves said: “When I became Chancellor, we faced a £22billion black hole in the public finances.
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“The decisions that I took in the budget last year both stabilised the public finances but also enabled us to invest £25billion in the NHS, and that money has meant that for the last five months in a row, we’ve seen NHS waiting lists fall, and within the first few months of this Labour government taking office, two million additional appointments are in our NHS.
“That’s the difference that we are making, only possible because of those decisions that we took but working people will see no rise in taxes in their pay slips, whether that’s their national insurance, income tax, or indeed their VAT, or fuel duty.”
Ms Reeves said that the Government is “determined to get the best deal we can” with the US after Mr Trump slapped tariffs on goods from the UK. “Well, of course, we don’t want to see tariffs on UK exports, and we’re working hard as a government in discussion with our counterparts in the US to represent the British national interest and support British jobs and British industry,” the Chancellor said on Friday.
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She would not give a timeframe for when she expected those discussions to bear fruit. “I’m not going to give a running commentary on those discussions. They’ve been ongoing since our Prime Minister Keir Starmer had a successful visit to the White House to meet President Trump just a few weeks ago,” she said.
It comes after Foreign Secretary David Lammy earlier said he regrets America’s “return to protectionism” after Mr Trump insisted Keir Starmer was “very happy” with Britain’s treatment over US tariffs. Mr Lammy said people across the country were “very concerned” about how the move to slap 10% import taxes on goods would hit their own finances, and that “all options” remain on the table to respond in the national interest.
Ministers have insisted they will remain “cool and calm” as they seek to secure an economic deal to mitigate the damage to Britain, but are not ruling out the possibility of retaliatory levies on a range of American products. But despite the UK Government having made clear its disappointment in the tariffs, the US President told journalists on board Air Force One late on Thursday that the Prime Minister was “very happy” with the result.
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