Is Rachel Reeves Making Decisions That Could Tank the Economy?

CREATED BY ROGER EDDOWES Published: 11/08/2025 @ 09:00AM #BritainFinance #RachelReeves #TurbulentWaters #HardTruths #EconomicStability

Navigating the turbulent waters of Britain's financial landscape, Rachel Reeves must confront some hard truths. Failure to make informed decisions could tank the economy and sacrifice the very economic stability and growth we aim for ...

Tank the economy, or fuel stability and growth? A Chancellor's conundrum

Right now, it feels as though we are staring down the barrel of a financial conundrum that could potentially cause great harm to our economy if not handled adeptly. As the Tories' supposed £22m black hole has spiralled to £50bn in less than a year of this Labour government, we now find ourselves at a crossroads.

The Chancellor has the formidable responsibility of
getting the nation's finances under control!

Yet her struggle to communicate the need for spending cuts to both the public and her colleagues is palpable. Two U-turns on proposed cuts have left many querying the government's strategy moving forward.

Without robust growth - predicted by the IMF to hover around 1.2 per cent this year and 1.4 per cent in 2026 - the pressure mounts. Relying solely on tax hikes reminiscent of draconian measures from last autumn's budget could, effectively, tank the economy. The indiscriminate rise in National Insurance not only hit businesses hard last year, but has increasingly provoked job losses, as firms grapple with escalating costs.

In addition, attempts to align Capital Gains Tax policies with income levels aimed at boosting funds have actually had an adverse effect - earning nearly £17bn less than anticipated. When non-dom rules shifted, they unintentionally encouraged asset relocations, frustrating efforts to capture wealth that should contribute to public services.

If Reeves opts for high-risk tax strategies while ignoring sensible alternatives, we could see repercussions far beyond mere budget shortfalls.

The idea of removing tax relief on pensions or altering taxable income categories - like rental income - might yield minor returns, but could inadvertently cause further damage to the economy. The Institute for Fiscal Studies suggests applying NI to pension contributions might raise significant funds, but the ultimate consequence will be borne by the workers, undermining their financial security further. This is not what Labour promised in its election manifesto.

Yes, if we face facts, significant revisions to our
taxation strategy must occur!

Dropping the triple lock on state pensions could free up considerable resources, alleviating future burdens projected by the OBR. There's also merit in broadening the scope of VAT application - strategies that could replenish public coffers without crippling citizens' financial future. These alternatives provide much-needed revenues while remaining reversible if economic conditions shift or if public sentiment demands it.

Denmark's recent, straightforward decision to raise the pension age to 70 serves as a stark reminder of the hard decisions necessary for fiscal health. Similarly, Reeves must lead in a manner that balances necessary revenue generation with the realities of public need.

Ultimately, this responsibility cannot be deferred!

The choices made today will either secure our financial footing in the long term or hasten an unwelcome descent that will surely tank the economy. Embracing tough decisions might not be politically expedient, but it is, without a doubt, a necessity for the future of our nation's finances.

I await the Autumn Budget with trepidation.

Until next time ...

ROGER EDDOWES
Join our mailing list! Click here and be one of the first to know when we publish a new blog post!

Share the blog love ...

Buffer Facebook Twitter Linkedin Pinterest WhatsApp #BritainFinance #RachelReeves #TurbulentWaters #HardTruths #EconomicStability

About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach. Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.

More blog posts for you to enjoy ...
		The Implications of Opting Out of Winter Fuel Payments for Wealthier Pensioners Wealthier pensioners may consider opting out of winter fuel payments due to the implications of tax recovery. This blog post elaborates on the recovery process, eligibility criteria, and how to successfully opt out before the...
		Navigating the Gaps in the UK Industrial Strategy: A Look Beyond the IS-8 The UK industrial strategy, unveiled on 23rd June 2025, aims to boost specific sectors vital for the economy, but it leaves significant gaps that could affect many businesses. While the strategy sets the stage for thriving in...
		The Spending Review Promises Enhanced Digital Services At HMRC The Spending Review 2025 sets a transformative path for HMRC, marking significant enhancements in digital services and efficiency. With guaranteed funding, the plan is to modernise operations and focus on digital self-serve o...
		The Government's New Industrial Strategy: Boosting Professional Services for Future Growth I wanted to explore the key components of the government's new industrial strategy, which identifies the professional services sector as a vital growth engine for the UK economy, highlighting reforms, regional hubs, and partn...
		How Innovative Policies Can Boost UK Economic Growth In the face of recent disappointments in economic performance, various strategies are emerging that can effectively boost UK economic growth. Government initiatives in infrastructure, taxation, and labour might hold the key t...
		HMRC Looking At VAT on Strawberry And Crème Sandwiches: A Sweet Dilemma The recent buzz surrounding M&S's Strawberry and Crème sandwiches has thrust VAT on different products into the limelight again. Are these delightful creations zero-rated under UK VAT law, or do they fall into the dreaded 'co...
		Bank of England Announces Ambitious Plans to Redesign Banknotes The Bank of England is set to redesign banknotes for the first time in over half a century. This major initiative opens the floor for public input on themes like nature, innovation, and history, aiming to reflect a contempora...
		7 Ways To Navigate Employee Well-being: Working During a Heatwave As the UK faces record-breaking temperatures, employers have a profound obligation to ensure the comfort and safety of their staff. Heatwaves pose unique challenges, particularly for those employed in environments where the h...

Other bloggers you may like ...
		Discovering Happiness: What It Means to be Self Employed Posted by Jacky Sherman on https://www.jackysherman.com Are you self-employed and trying to navigate the pathway to happiness? Understanding the dynamics of success and self-perception can significantly enh ...
		Rethinking Taxation: The Case for Taxing Income from Wealth, Not Work Posted by Helen Beaumont on https://blog.essendontax.co.uk As debates on taxation intensify, the effort to transition toward taxing income from wealth rather than work emerges as an intriguing policy alternati ...
		Empower Your Business: Why a Self-Managing Virtual Assistant Is Your Best Ally Posted by Sarah Hannaford on https://blog.sarahpasolutions.co.uk A self-managing virtual assistant is a game-changer for professionals seeking to optimise their workflow. By providing expert support with minimal sup ...
		Small Business Owners: Discover Why A sBlogIt! Blog Has Superpowers Posted by Steffi Lewis on https://www.sblogit.com Your sBlogIt! blog has a couple of superpowers that elevate it beyond traditional marketing channels like social media, email marketing and yes, even ...