Editorial: Anxious times as Labour government and chancellor Rachel Reeves prepare to unveil first budget later this week

The Labour government is set to unveil its first budget this week and many people are understandably anxious.

At one stage, budgets were unveiled in March, ahead of the new financial year. During the autumn the government made a statement or occasionally crafted a “mini budget”.

We can thank Theresa May’s administration for the fact that a full slate of tax and spend policies are now announced in November.

This year, Labour claims there is a “fiscal black hole” that it must fill with tax rises.

The chancellor, Rachel Reeves, has promised these will not affect income tax, VAT or national insurance, but the implication is that everything else is fair game.

The idea of a “black hole” is spurious in itself. The cost of the government’s Covid policies was certainly high, but our financial situation was well publicised and the idea that Labour discovered things were much worse is unpersuasive.

If, as expected, certain taxes go up, it will be to pay for expensive services, including pay rises above inflation that the government quickly stumped up for public sector workers.

In Northern Ireland, there is a tendency to assume we benefit from high levels of public spending. This time, though, the government’s largesse is likely to be limited. And, in any case, what we really need is our position within the UK internal market repaired and a more vibrant private sector.

The expected tax rises are likely to worst affect investors and owners of assets. These policies may not alienate voters as much as more overt hikes, but they are likely in the longer term to inhibit wealth creation and make all of us poorer.

It is to be hoped that the Labour government is more restrained than the media stories suggest.