Will your spending habits change if Rachel Reeves hikes taxes? How readers voted

With a month to go until the autumn budget, speculation is swirling as to what chancellor Rachel Reeves could announce to help raise funds to boost the UK's public finances.

Economists have warned that Reeves will likely need to announce billions in tax rises in the budget on 26 November. Figures released by the Office for National Statistics on Tuesday showed that government borrowing hit £20.2bn in September, which was the highest level of borrowing for the month in five years.

Ruth Gregory, deputy chief UK economist at Capital Economics, said that September's figures "highlight the poor performance of the public finances even though the economy hasn’t been terribly weak". She said that this supported Capital Economics' view that Reeves will need to raise around £27bn in the budget, "mostly through higher taxes".

Meanwhile, Berenberg senior UK economist Andrew Wishart also said that Reeves would likely need to announce around £25bn of tax rises and/or spending cuts in next month's budget.

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Analysts at Goldman Sachs (GS) recently said they expected Reeves to unveil a package of tax rises and spending cuts totalling around £30bn.

As the budget draws closer, one question has been whether the Labour party would be forced to break its election pledge of not raising taxes on "working people", promising not to increase the rates of income tax, national insurance or value-added tax (VAT).

The Guardian reported on Thursday that Reeves was considering raising income tax in the budget to help fill the shortfall in public finances. A spokesperson for the Treasury had not responded to Yahoo Finance UK's request for comment at the time of writing.

Significant tax rises could inevitably spell trouble for many UK households who are already grappling with the higher cost of living or simply tightening their belts to avoid financial struggles down the line.

Earlier this week, we asked Yahoo Finance readers if they would change their spending habits if Reeves hiked taxes in the budget. We received 872 votes, with 73% of respondents saying that they would, while 17% would not and 10% were undecided on the matter.Will your spending habits change if Rachel Reeves hikes taxes?

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