Shorouk Express
The government is braced for the possibility that the U.S. may retaliate against Britain’s 20 percent Value Added Tax — a consumption levy added to most goods and services. The first U.K. official quoted above voiced concern this could be set at the difference between U.S. sales taxes and the VAT rate, so around 12 to 14 percent.
Easing up on U.K. taxes on big tech firms, something that’s being mulled in a bid to swerve Trump’s tariff wrath, could also cause a fresh headache for Reeves. Some Labour backbenchers have already raised the alarm at the optics of going soft on tech giants while cutting social security payments.
More detail of where £5 billion of welfare cuts will fall will also be published Wednesday, and could overshadow Reeves’ attempts to talk up Britain’s growth prospects.
“It’s the most worried the center [of government] has been” about any one issue, a fourth, loyal Labour backbencher said. The second frontbench MP quoted above summed up the welfare cuts as “an array of sh*t.”
A fifth, senior backbencher said that while colleagues had been willing to give ministers the “benefit of the doubt” over previous cuts to social security payments for pensioners and a move not to compensate women hit by a pension age increase, the welfare reforms were a step too far. “This is a red line for me,” they added.
‘No wiggle room’
Reeves faces trouble in every direction — but British chancellors have been here before. The Conservative-Liberal Democrat coalition of the early 2010s faced criticism for making huge cuts to public spending in the aftermath of the global financial crisis.
