ANDY HALDANE EXPECTS TAX RISES AND MORE BORROWING IN BUDGET

Andy Haldane said he expects the Chancellor to raise taxes and borrow more in the forthcoming Budget. The former Bank of England chief economist made the forecast at a pre-Budget event held by the National Institute of Economic and Social Research and Ipsos. He said the Chancellor could draw on a £24 billion financial cushion to increase borrowing. “We will see some further tax rises, and neither of those, I think, are good news from a growth perspective,” Haldane said.

Haldane warned that higher taxes on banks could harm investment. He also backed the Conservatives’ plan for a smaller state, saying it offered the best chance for growth. Haldane has previously worked as an aide to Andy Burnham. Describing whom he thought the Budget would serve, he said he expected “a Budget for the backbenchers rather than for business or the bond markets”.

Research by Ipsos and the National Institute of Economic and Social Research found that nearly two-thirds of British adults expect the Chancellor to announce tax increases at next week’s Budget. The research also found that 51 per cent expect increased borrowing. It suggested that 52 per cent fear financial markets could severely lose confidence in the government’s ability to repay its debt. Those findings record respondents’ expectations and concerns ahead of the Chancellor’s announcement.