Oh dear, Rachel Reeves. £300 million short already, and it’s only been a few months since your much-vaunted tax raid began.
The OBR’s verdict is in: despite hammering businesses and workers with a £25 billion National Insurance hike, the Treasury still ended up borrowing more than expected in May. Who could have predicted this?
Well… pretty much anyone with a basic grasp of economics.
Certainly anyone who’s ever read a graph of the Laffer Curve. Because here’s the simple truth: you can’t just keep jacking up taxes and expect to squeeze more revenue out of a weary, overburdened economy. At some point, people shift, adjust, slow down or leave. The golden goose doesn’t lay more eggs when you throttle it.
Yet Reeves charged ahead with her NI hike, banking on higher returns and claiming fiscal virtue. And what do we have to show for it? Tax receipts below forecast, borrowing above forecast, and the grim realisation that, once again, the numbers don’t lie, even if her CV does.
Yes, let’s talk about that. It’s been widely reported that the woman now in charge of our national finances once embellished her qualifications. She has a record that suggests more political calculation than financial acumen. And now she’s walking around with a calculator in one hand and a sledgehammer in the other.
Reeves’s defenders are already spinning the figures: borrowing was slightly better over the two-month window than the OBR predicted! But come on – May borrowing was the second-highest on record outside the Covid crash. Despite record tax intake, the government still outspent the windfall. Where’s the grip?
Inflation-linked benefits, bloated department spending, a lack of meaningful reform, it’s the same tired model. And if your answer to that is always “raise taxes,” you’re not solving problems. You’re just shifting the pain around.
Let’s not pretend the economy is some abstract spreadsheet. These are people’s livelihoods. Entrepreneurs who now think twice about expanding. I am one of them! Employers staring at their payroll tax bill and deciding not to hire that extra person. Families watching their disposable income shrink under the weight of higher deductions and higher prices.
And the worst part? This all feels depressingly predictable. Reeves’s tax raid was never about economic growth. It was about optics and in some aspects… politics of envy. Show “toughness” on the deficit. Appear “serious” about the public finances. But seriousness requires more than slogans. It requires understanding how incentives work, how capital flows, how you create growth rather than simply extract more from a shrinking pie.
So here we are: higher taxes, lower-than-expected receipts, and rising borrowing. The Chancellor insists she’s “stabilised the economy.” That depends on your definition of stable. If you’re standing still while the debt clock ticks and businesses tighten their belts, that’s not stability. That’s inertia.
We need leaders who can think beyond the next quarterly headline, who understand that prosperity is created, not commanded. Right now, the Treasury feels more like a tollbooth than a growth engine. And that’s not just bad policy. It’s bad for Britain.
By Claire Bullivant
Brexit is 9 years old on June 24th. That great day when Nigel Farage said “the sun has risen on an independent United Kingdom” . Thanks to brexit Gov.uk announced – UK-Bahrain agree £2bn investment partnership in huge boost for UK economy. The Deutche bank told its investors “if Britain leaves the EU, then invest!” Companies will make more money