Rachel Reeves is preparing to announce billions worth of cuts to public spending tomorrow whilst simultaneously downgrading the country's growth forecasts. Tax hikes announced in October are to blame for falling growth which prompted businesses to cut back on investment. This has resulted in disappointing tax revenues in recent months and a stagnant economy.
Rising debt, low/no growth and the promise of further tax hikes are not fertile grounds in which to plant seeds. UK debt costs have risen amidst the recognition that inflation is rising and that the UK will issue significant amounts of debt to fund its spending. If not managed correctly, the UK would enter into a fiscal emergency.
More than half of the public now believe the economy is worsening (according to the latest survey by KPMG). Just like businesses, households are spending less and as a services nation, this is very bad news. The UK desperately needs a breakthrough moment just like Germany recently.
Finally, UK borrowing costs have been comfortably and sustainably above Liz Truss' mini-budget and there is no sign of a recovery. All this means the Chancellor has to come out with something positive tomorrow that investors can really get behind or risk further economic deterioration and a softer Pound.
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