Berliner Abendpost - UK's Labour govt prepares to deliver decisive first budget

The highly-anticipated fiscal update -- the first under the centre-left government after 14 years of Conservative rule -- is crucial to Starmer's mission of firing up Britain's economy.

But to do that, he said there will be a number of "tough decisions".

The government has confirmed that the budget will include tax rises, cuts to public spending and changes to fiscal rules to enable borrowing billions more to invest.

Finance minister Rachel Reeves, who will present the budget to parliament October 30, has promised "iron discipline" over public finances.

Criticism has already been mounting against the government for scrapping a winter-fuel benefit scheme for millions of pensioners with a recent YouGov poll showing only 18 percent of the public approves of its performance.

- Fiscal rule changes -

The government has pledged to claw back what it says is a £22-billion ($28.6 billion) black hole in public finances inherited from the previous Tory government.

With the UK's public sector borrowing already back to levels last seen in the 1960s, Reeves will be shaking up Britain's fiscal rules to allow her to borrow billions more to fund public-sector investment.

Starmer has already announced a number of policies that will be included in Wednesday's budget, as he aims to fix "crumbling" public services and "stagnant" living standards.

The government is set to allocate £240 million to roll-out local services to help people get back to work.

It will also extend a cap on bus fares until next year but will raise the cap to £3 from £2.

Reeves has announced that £1.4 billion will be allocated to rebuild schools and £1.8 billion will go towards government-funded childcare.

She also said she will triple investment in free breakfast clubs.

The National Health Service is expected to receive a substantial boost, however Reeves warned Tuesday that one budget cannot "undo 14 years of damage" to the service.

- Tax rises -

The government has pledged not to raise taxes for "working people" -- which would rule out an increase to national insurance, income tax and VAT.

However, to meet this promise, Starmer has confirmed that other taxes will need to rise.

"Nobody wants higher taxes, just like nobody wants public spending cuts, but we have to be realistic about where we are as a country," he said in a speech on Monday.

Reeves is expected to raise employers’ –- rather than employee -– national insurance contributions by at least one percentage point in the budget.

Analysts are also predicting an increase in capital gains taxes and a reform of inheritance levies.

It's a move that has already attracted criticism from the opposition party.

"She promised not to raise tax, and tomorrow, she's planning the biggest tax raising budget in history," Conservative finance spokesman Jeremy Hunt said in the House of Commons on Tuesday.

Alongside the budget, government fiscal watchdog the Office for Budget Responsibility (OBR) will provide revised forecasts on Britain's economic growth.

D.Mayer--BlnAP