Chancellor Rachel Reeves announced a substantial fiscal plan on October 30, 2024, which includes £40 billion in new taxes and an additional £31.5 billion in borrowing, aiming to address the UK's economic challenges.

The UK's national debt has reached £2.8 trillion, roughly equivalent to the country's annual economic output, raising significant concerns about financial stability.

Inflation is projected to increase from 1.7% in September 2024 to 3% in 2025, further complicating the situation by increasing the cost of servicing the national debt.

The economic difficulties facing the UK are attributed to financial crises experienced under both Labour and Conservative governments, with Reeves inheriting these issues but struggling to manage them effectively since taking office.

Economists, including Alex Kerr from Capital Economics and Matt Swannell from the EY Item Club, caution that Reeves may need to implement even higher taxes to accommodate increased spending and disappointing tax revenues.

In October, over half of the government's borrowing was allocated to interest repayments on the national debt, totaling £9.1 billion, marking the highest figure recorded for that month.

The UK's borrowing for October 2024 reached £17.4 billion, the second highest for that month since records began in 1993, exceeding the initial forecast of £12.3 billion.

Reeves's budget proposal includes a £25 billion increase in employer National Insurance charges, which is anticipated to negatively affect jobs, wages, and overall economic growth.

Despite Labour's initial stance against cutting public services or benefits, the party's readiness to raise taxes could further hinder economic growth.

In contrast to Reeves's tax increases, previous tax cuts under former Chancellor Jeremy Hunt did not lead to a decline in tax receipts, indicating that lower taxes might stimulate economic activity.