Chancellor John Healey is expected to announce significant tax increases in the upcoming Budget, with economists warning that rising gilt yields have reduced the fiscal headroom to £13bn, down from £22.7bn. This situation will likely lead to increased debt interest payments, with the total projected to reach £135bn by 2030. Handelsbanken says a jump in the 10-year gilt yield could "further erode" the fiscal headroom available to Mr Healey, while Rob Wood and Elliott Jordan-Doak from Pantheon Macroeconomics warn: "More large tax hikes are on the way." Meanwhile, Lord Jim O'Neill has cautioned that a rise in capital gains tax may be on the cards. Lord O'Neill said that if the Chancellor and Prime Minister are "going to have to find some money to balance the books, something like capital gains tax looms out." However, he warned that such a hike is the "last thing that should be happening when we want more growth," expressing concern that it will "force even more genuine risk takers to be discouraged and think about either moving or not doing as much of this kind of thing as they've done."
