Rachel Reeves has indicated that future tax increases cannot be ruled out, saying: “I can’t write five years’ worth of budgets in just the first five months of government.” Following the Chancellor’s first Budget, which raised taxes by £40bn, she described it as a “once-in-a-Parliament” fiscal event aimed at addressing the previous administration’s mismanagement. Despite her assurances, uncertainty remains as Sir Keir Starmer acknowledged that unforeseen circumstances could necessitate changes in tax policy. Her comments came as the Government launched a new spending review aiming at ensuring taxpayer money is used efficiently, with departments urged to identify 5% savings.

HMRC has been accused of neglecting the issue of fraudulent Chinese “burner” companies, which are reportedly costing the Treasury hundreds of millions of pounds annually due to tax evasion. An investigation revealed that around 30,000 Chinese firms have registered at UK addresses this year, often with no legitimate connections to the locations. Richard Allen from Retailers Against VAT Abuse Schemes said: “You need more ID to take out a library book in the UK than to register a company and obtain a VAT number.” Critics argue that HMRC’s lax compliance checks enable these scams, allowing companies to evade VAT and import duties. An HMRC spokesperson acknowledged the issue, stating they could pursue online marketplaces for unpaid VAT, but critics remain sceptical about the effectiveness of these measures. Meanwhile, Companies House is preparing to implement compulsory identity verification checks to combat fraud.

Tej Kohli, a billionaire tech investor, warns in a piece for City AM that Sir Keir Starmer’s tax hikes are undermining Britain’s entrepreneurial spirit at a critical time for global technological advancement. Kohli says: “Taxing our way to prosperity has never worked,” pointing to the need for a more welcoming investment environment. He criticises the recent Budget, particularly the scrapping of non-dom status, which he believes deters wealth creators and innovators. Kohli advocates for streamlined visa processes, targeted tax breaks, and enhanced partnerships between universities and businesses to foster innovation.

Willie Walsh, chief executive of the International Air Transport Association has expressed concerns over the impact of recent tax increases on the UK aviation industry. He described the government’s approach as “schizophrenic,” stating that while there is vocal support for aviation, actions such as the rise in air passenger duty (APD) and increased business rates are damaging. Walsh said: “The words have been encouraging, the actions not so encouraging,” highlighting the contradiction between government rhetoric and policy. He warned that these measures could limit the industry’s growth potential, especially as the UK seeks to enhance its global trade relationships post-Brexit.

Insolvency specialist Begbies Traynor has warned of an impending rise in company struggles following the Chancellor’s Budget. The firm noted that insolvencies in the UK are currently at “elevated levels,” with notable collapses such as Typhoo Tea. Begbies Traynor said: “We anticipate continuing growth in business recovery, our largest service line, as businesses face continuing demand pressures and cost challenges.” revenue in the half year ended October 31, 2024, increased by 16% to £76.3m while statutory profit before tax rose by 57% to £4.7m.

Since the end of pandemic lockdowns, the public purse has lost £100m due to tax breaks for home workers, with an estimated 300,000 claimants in 2023/24, a significant increase from just 16,000 in 2018/19. The relief allows employees to claim for additional household costs incurred while working from home, such as energy bills. Critics argue that the trend of working from home is impacting productivity and should be reassessed to better support taxpayers. John O’Connell, chief executive of the TaxPayers’ Alliance, said: “The work from home trend does not seem to have had the benefits to the economy that many predicted, suggesting that this is not an ideally targeted tax relief.”

Recent data indicates that British job vacancies have decreased significantly, with a 23% drop in postings on Indeed compared to last year. This decline is sharper than the 14% reduction reported in official statistics from August to October. While France experienced a 22% decrease, other nations like the US and Germany saw declines between 5% and 15%. Jack Kennedy, an economist at Indeed, commented: “The balance of power has certainly swung towards employers as the labour market has softened.” The situation has worsened following Rachel Reeves’ announcement of a £25bn increase in employer national insurance contributions, leading to a cautious hiring approach among businesses. The Recruitment and Employment Confederation reported a collapse in demand for workers last month, highlighting a deteriorating jobs market.

The Financial Conduct Authority (FCA) has firmly stated it will not adopt a “light-touch” approach to regulation, despite criticism that its current measures hinder growth. During a Treasury Committee meeting, FCA chief executive Nikhil Rathi and chair Ashley Alder discussed the challenges of balancing regulation with the need for growth. Alder remarked: “I think we’re at a bit of an inflection point,” highlighting the “difficult trade-offs” involved. The new Labour Government aims to dismantle excessive post-financial crisis regulations, as outlined in Chancellor Rachel Reeves’ remit letter to the FCA. But the FCA is adopting a cautious position, arguing that diluting standards would lead to problems down the road. Mr Rathi said: “If you are going to allow more risk into the system, sadly, in the financial services industry it can attract people that don’t have the best of intentions. And we are not going to be able to stop everything.”

The bond market is experiencing significant stress due to increasing government debt and relaxed fiscal policies, the Bank for International Settlements (BIS) has warned. The BIS said the “re-emergence of fiscal concerns” following political changes in the US and France, which have raised alarms about funding deficits amid potential inflation. Despite a record rise in US stock prices, sovereign bonds in the US, UK, and eurozone have seen declines. The BIS pointed to Labour’s recent Budget as an example of fiscal loosening, stating: “Potential concerns about the fiscal positions in some jurisdictions emerged as another key driver of bond markets.”