Rachel Reeves's disastrous socialist budget will see people squeezed to breaking point

Many businesses, entrepreneurs and low-paid workers will be reeling from Rachel Reeves's disastrous socialist budget on Wednesday.

Taxes are set to rise by a whopping £40billion, the highest ever, with ordinary people squeezed to breaking point as they bear the brunt of the costs. It's hard not to be concerned.

In truth, we could all be forgiven for being shell-shocked by this Budget, especially given that Labour had insisted that its plans were fully costed and tax hikes weren't required, until just a few short months ago.

For a party that lambasted the Tories for overseeing the highest tax levels since the Second World War, Labour's tough talk didn't suggest they were planning to overshadow the last government by an order of magnitude in tax hikes.

But that is exactly what they have done. And for this blatant lie, the country will now be left poorer and less attractive to investors for the foreseeable future.

Perhaps the biggest irony is Labour's insistence there would be no tax rises for "working people" before it whacked firms with an increase in National Insurance contributions of £25billion. This effectively functions as a tax on working people by punishing small business owners with extra costs.

The country can now expect lower wages and fewer jobs - hardly the 'help' working people needed. With Wednesday's budget, Ms Reeves made her agenda clear: spend more, borrow more, and tax us to high heaven. And she is taking a huge gamble.

While Labour did announce significant infrastructure investment, including billions of pounds of state investment in technologies like carbon capture and 'green' hydrogen, the question is whether this will pay off. The party has taken a wild bet on the economy surging. But so far, forecasts are looking less than great.

In the OBR's Economic and Fiscal Outlook, growth forecast to increase to 2% in 2025 was downgraded to 1.6% by 2029. And the influential think-tank Resolution Foundation warned wages are likely to stagnate, meaning a decline in people's spending power.

So, the Government is willing to run the risk of accruing extra debt, increasing unemployment and clobbering businesses with huge tax rises all for a potential payoff of a measly 1.6% growth in GDP.

This is hardly inspiring, especially when considering all the other pressures the country faces, namely crumbling infrastructure, an ageing population, and perhaps most importantly, very high levels of immigration.

Yet ironically it is more expensive for Britain to borrow now than it was two years ago, when Ms Reeves, then shadow chancellor, criticised Liz Truss and Kwasi Kwarteng for "crashing the economy" with their mini-Budget. Today, yields on 10-year government bonds are 4.4%, up from 3.75% just last month.

So, for every penny of £140billion more that the Chancellor plans to borrow over the next decade, future generations will be saddled with even more interest to pay off.

And that is the crux of the issue: debt. It is the real albatross around Britain's neck. And it is a sad truth that is often overlooked. In 2023-24, total government spending was £1.2trillion, about 45% of GDP, the highest level in percentage terms since 1947 (excluding the Covid era).

You would expect such high levels of spending to result in high-quality public services, infrastructure, or generous welfare benefits. But, of course, the complete opposite has in fact happened.

This is partly because £116billion of the total spend is debt interest - the fourth-highest expense. And let's be clear here: that figure is not a repayment of our actual debt, but simply the interest alone on it.

For context, debt interest is 80% of the amount spent on education, ten times higher than the amount spent on overseas aid (28% of which is being spent on hosting illegal asylum seekers), and about five times higher than the amount spent on social care.

We spend just as much on servicing our debt as we do on defence, policing, prisons, justice, and transport budgets combined. How can we make the investments necessary to pull the country out of this toxic cycle when we spend so much money paying back creditors?

In fact, about 30% of UK debt is owned by foreign investors, mainly Chinese and Emirati buyers of UK bonds. Needless to say, these are not poor people.

If these tax rises depress economic performance (as forecasts now indicate), more money will be borrowed to plug the gap between government expenditures and revenue, leading to higher borrowing costs. And so, the cycle repeats.

If current trends continue, things will only worsen. And with this Budget, the Chancellor has condemned Britain to even larger sums of debt and doomed future generations for years to come.