Rachel Reeves 'must find billions more' in time for Budget - IFS

Published On Oct 9, 2024, 7:04 PM

Chancellor Rachel Reeves faces pressure to secure an additional £16bn in funding to uphold the UK government's pre-election commitments without resorting to austerity measures. The Institute for Fiscal Studies (IFS) highlights that her first Budget, scheduled for October 30, must address rising public service demands and fiscal constraints, with a potential shift in tax burdens anticipated towards higher earners. The government has vowed to enhance public spending while navigating an environment of elevated debt and inflation, which poses risks for future investments and growth strategies.

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Stock Forecasts

IHIView IHI chart on TradingView

Positive

Investors should be on the lookout for potential shifts in taxation policy that could impact sectors reliant on government spending. Companies in the healthcare and public services sectors might find opportunities if the government increases spending here, but increased taxes could weigh on overall economic growth.

XLYView XLY chart on TradingView

Negative

Given the anticipated focus on higher taxes to fund public services, consumer discretionary sectors may feel pressure as disposable income could be impacted. Caution is advised in investing in companies that are heavily reliant on consumer spending as this could suppress growth.

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