UK Chancellor Jeremy Hunt raised the basic income tax rate from 19% to 25% and froze income tax rate thresholds for six years in the spring budget of 2023. The Institute of Fiscal Studies (IFS) projects that tax revenue in the UK will reach a record high of 37.7% of GDP by 2030, while per capita government spending is expected to barely grow.
Analysts predict the growth of net migration will play a major role in this. The Office for National Statistics (ONS) projects that by 2036 there will be 73.7 million people living in Britain, 6.1 million of whom are immigrants.
It is anticipated that the next government will raise public service spending by an average of 0.9%, or roughly 0.5% annually per person.
The IFS cautions that the nation’s budget requires an extra 25 billion pounds to avoid such a scenario, as reported by The Telegraph. The government can offset this amount by raising taxes again, and cutting expenditures in the defense, education, and housing departments, although the latter will undoubtedly engender unrest among the populace.
