Brits will end up being paid less after Labour's Budget, admits Reeves

Rachel Reeves admitted Brits will see lower wages as a result of her Budget mega-raid today - amid warnings she will be back for more.  

The Chancellor refused to rule out further rises in the record burden as she toured broadcast studios this morning in the wake of her extraordinary £40billion package.

Despite repeatedly insisting that she would protect 'working people', Ms Reeves also conceded that pay will end up lower than it would have been in the coming years as a result.

The comments came as the respected IFS think-tank insisted Labour will 'probably' have to increase taxes again to maintain her 'sugar rush' spending bonanza.

The OBR watchdog concluded yesterday that the pain of the £25billion increase in employers' national insurance will largely be passed on to workers.

Some 76 per cent of the total cost is expected to be felt through a combination of a squeeze on pay rises and increased prices.

The measure could also lead to the equivalent of around 50,000 average-hour jobs being lost, the watchdog said.

Inflation is also set to stay higher for longer, extending the cost of living crisis and casting doubt on hopes of speedy interest rate cuts for struggling mortage-payers. 

The Chancellor told BBC Breakfast: 'I said that it will have consequences.

'It will mean that businesses will have to absorb some of this through profits and it is likely to mean that wage increases might be slightly less than they otherwise would have been.'

Dodging on whether there will need to be more tax rises, Ms Reeves told Times Radio: 'I'm not going to be able to write future budgets, but look, this was an exceptional Budget.

'This Budget was to wipe the slate clean after the mismanagement and the cover-up of the previous government.

'I had to make big choices. I don't want to repeat a Budget like this ever again, but it was necessary to get our public finances and our public services on a stable trajectory.

'I'm not going to be coming back in the spring for more money. I've committed to only have annual budgets, rather than the twice-yearly budgets we had from the previous government, to give families and businesses certainty. This was an exceptional budget.'

James Smith of the left-leaning Resolution Foundation think-tank said the national insurance increase was 'definitely' a 'tax on working people'.

Mr Smith said: 'This will definitely show up in wages. This is definitely a tax on working people, let's be very clear about that.

'Even if it doesn't show up in pay packets from day one, it will eventually feed through to lower wages.'

In the most Left-wing Budget for decades yesterday, the Chancellor pushed taxes to their highest level in history and relaxed government borrowing rules to finance a massive spending spree.

But the OBR cut its forecast for economic growth in the later years of this decade, making a mockery of her ambition to be 'the most pro-growth Chancellor in history'.

In a warning to millions of 'working people', the economic watchdog predicted that the Chancellor's Budget measures would fuel inflation, push up mortgage rates and squeeze wages.

Average real household disposable incomes are expected to be around £300 lower per person as a result of the fiscal event.

Tory leader Rishi Sunak said ordinary people would 'pay the price' for a 'horrifying' Budget containing 'broken promise after broken promise'.

Shadow chancellor Jeremy Hunt meanwhile said Ms Reeves had not honoured commitments to hold taxes down.

'Many people thought this was a new Labour prospectus, not a traditional tax-and-spend prospectus, and they have woken up to a Chancellor who has given us the biggest tax-raising Budget in history,' Mr Hunt told BBC Breakfast.

IFS director Paul Johnson warned Ms Reeves may have to come back for 'another round of tax rises in a couple of years' time - unless she gets lucky on growth'.