Budget 2025 Forecast: Why Rachel Reeves' Tax Plan Will Backfire
Read the full paper here: https://iea.org.uk/publications/2025-budget-briefing-tax-policy-preview-options-and-possible-impacts/With Chancellor Rachel Reeves set to deliver her Autumn Budget on Wednesday 26th November, IEA Economics Fellow Julian Jessop joins Managing Editor Daniel Freeman to discuss his new budget briefing paper. Jessop warns that the Chancellor faces a financial hole of up to £30 billion and will likely attempt to fill it through a combination of extending the freeze on personal tax thresholds and what he describes as a “dog’s breakfast” of smaller tax measures. While the largest component of the hole – around £20 billion – stems from a long-overdue downgrade to the OBR’s productivity forecasts, the remainder results from Labour’s own policy decisions, including abandoned welfare reforms and increased spending commitments.The discussion explores why attempting to raise £20 billion from numerous small tax changes is economically risky and likely to prove unreliable. Jessop argues that such a patchwork approach – potentially including higher Council Tax on expensive properties, closing Capital Gains Tax loopholes, imposing National Insurance on rental income, and increased sin taxes – creates greater uncertainty and unintended consequences than a simpler rise in broad-based taxes like income tax or VAT. He reveals that the government reportedly abandoned a “two up, two down” plan to raise income tax rates by 2p while cutting employee National Insurance by 2p, likely due to political concerns about breaching manifesto commitments rather than improved economic forecasts.Jessop makes the case that the root problem is spiralling public spending, which is forecast to rise by £200 billion over the next five years from £1,150 billion to £1,350 billion. He argues that simply restoring productivity in public services to pre-COVID levels could provide the same services for 4% less money, eliminating the need for tax rises altogether. The conversation also covers broader tax reform possibilities, including abolishing stamp duty and National Insurance, and why successive governments have failed to rationalise the VAT system despite cross-party agreement among economists that it’s deeply flawed. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit insider.iea.org.uk/subscribe
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The 70% Tax Trap: The Government's Toxic Budget Predictions Revealed | IEA Podcast
We would like to apologise for the video quality issues that take place throughout the recording. This will be fixed for upcoming recordings.In this Institute of Economic Affairs podcast, IEA Managing Editor Daniel Freeman speaks with Kristian Niemietz and Julian Jessop about the upcoming autumn budget and Britain’s fiscal challenges. The conversation examines how bond market participants have become increasingly attuned to political instability, tracking everything from cabinet relationships to policy U-turns as indicators of fiscal risk. They discuss how competitive bond markets operate not on ideology but on risk assessment, and why claims of “bond market dictatorship” fundamentally misunderstand how financial markets work.The panel analyses Labour’s constrained position heading into the budget, caught between promises not to raise taxes on working people and the inability to cut spending due to backbench resistance despite a massive parliamentary majority. They examine various wealth tax proposals being floated, from mansion taxes to exit taxes on unrealised capital gains, explaining why international evidence suggests such measures consistently fall short of revenue expectations. The discussion covers the practical problems with revaluing council tax bands and the political toxicity of measures that would hit asset-rich but cash-poor homeowners.The conversation concludes with budget predictions, including the possibility that Labour might not just freeze tax thresholds but actually decrease them, potentially lowering the higher rate threshold to £46,000 and the additional rate to £100,000. This would create marginal tax rates exceeding 70% and hit millions more workers including senior nurses with higher rate tax for the first time. The panel debates whether the economic arguments can overcome the political toxicity of such moves as the Chancellor prepares for what they characterise as an economically and politically toxic budget. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit insider.iea.org.uk/subscribe
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Free Speech is Not Right or Left | Jacob Mchangama | IEA Podcast
n this episode of the IEA Podcast, host Daniel Freeman sits down with Jacob Mchangama to explore the fascinating history of free speech, from ancient Athens to modern social media. Jacob reveals how Socrates became a martyr for ideas he didn’t even believe in, why the Romans feared giving ordinary citizens a voice, and how medieval Islamic scholars championed free inquiry while Europe burned heretics. The conversation traces free speech through the Enlightenment, examining John Stuart Mill’s warnings about the tyranny of the majority and how these debates remain strikingly relevant today.Jacob explains why free speech has become increasingly polarised along political lines, with both left and right abandoning the principle when it becomes inconvenient. From Palestine Action protesters arrested in London to Trump administration pressures on media critics, the discussion reveals how quickly the targets of censorship can shift. He argues that legal protections for speech are ultimately downstream from culture, pointing to how American free speech exceptionalism is surprisingly recent, noting that people could be jailed for Communist Party membership in the 1950s or opposing World War I.The conversation concludes with Jacob’s call for a cross-partisan coalition committed to robust free speech protections, regardless of who’s wielding power. As he emphasises, abandoning free speech because people you disagree with invoke it is a shortsighted strategy that inevitably backfires when you’re on the receiving end. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit insider.iea.org.uk/subscribe
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The Truth About Scandinavian "Socialism" | IEA Interview
In this Institute of Economic Affairs podcast, IEA Head of Media and Linda Whetstone Scholar Reem Ibrahim interviews Dr. Nima Sanandaji, Swedish author, researcher and public policy scholar known for his work on entrepreneurship, innovation and welfare reform. The conversation challenges the conventional narrative around the Nordic model, examining how the myth of successful Scandinavian socialism obscures a century of free market prosperity built on low taxes and economic freedom. They discuss Sanandaji’s co-authored IEA briefing paper “The Welfare State Myth” which analyses welfare outcomes across advanced economies over five decades.Sanandaji reveals how Sweden’s economic success came from 100 years of low taxation and free market capitalism - including inventing the first company shares, central banking system and credit notes - before switching to high taxes in the 1970s led to stagnation and welfare dependency. The discussion examines comprehensive data comparing 30+ advanced economies, demonstrating that countries with lower taxes consistently achieve better welfare outcomes in employment, education and overall wellbeing. They explore how high-tax welfare states create poverty traps that particularly harm immigrants and young people, with evidence from Sweden’s policy failures and warnings about the UK’s trajectory toward mass welfare dependency.The interview concludes with policy recommendations drawn from successful low-tax countries like Ireland, Estonia and Malta, advocating for school choice, apprenticeship systems, healthcare competition and reducing government bloat. Sanandaji argues that countries like the UK are repeating Sweden’s mistakes by combining Anglo-Saxon legal traditions with socialist high-tax policies, leading to economic stagnation and declining welfare outcomes. The conversation challenges policymakers to examine the evidence showing that economic freedom and lower taxation produce superior results for citizens’ wellbeing and social mobility. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit insider.iea.org.uk/subscribe
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What is Scarcity? Episode 2 | Economics 101
Welcome to Economics 101, a new series designed to distill the fundamental principles of economics into clear, easy-to-understand explanations. Join Dr. Stephen Davies as he breaks down complex economic concepts using simple analogies and real-world examples, making economics accessible to everyone regardless of their background. Whether you’re a student, professional, or simply curious about how the economy works, this series will equip you with the essential knowledge to understand the economic forces that shape our daily lives.In this episode, Dr. Davies explores the most foundational concept in all of economics: scarcity. But scarcity doesn’t mean what most people think it means. It’s not about things being rare - it’s about resources requiring effort to acquire and transform, and the fact that using them for one purpose means you can’t use them for another. This simple insight leads to what economists call “the economic problem”: how do we decide what to produce with limited resources when people want different things? Dr. Davies explains why the price mechanism in competitive markets has proven to be the most efficient solution to this fundamental challenge, far more effective than central planning or consensus-building. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit insider.iea.org.uk/subscribe
The Institute of Economic Affairs podcast examines some of the pressing issues of our time. Featuring some of the top minds in Westminster and beyond, the IEA podcast brings you weekly commentary, analysis, and debates. insider.iea.org.uk
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