Rachel Reeves Abandons Income Tax Rise Plan in Surprise U-Turn

Breaking News: Chancellor Abandons Income Tax Rise Plan In a surprise move, Chancellor Rachel Reeves has shelved plans to raise income tax rates by 2p, a decision that comes after weeks of speculation and heavy hints that she would breach manifesto pledges to increase taxes. The plan, known as the "2 up, 2 down" proposal, would have raised several billion pounds from non-wage income such as landlords and savings, but was no longer deemed necessary following revised assessments from the Office for Budget Responsibility (OBR). According to sources, the OBR's updated projections have increased the forecast for wages and tax receipts, offsetting several billion pounds of the projected 30 billion gap in the public finances, which was mainly caused by a downgrade to productivity. The revised gap now stands at around 20 billion pounds. The decision to abandon the income tax rise plan is expected to have a significant impact on the market, with investors and analysts closely watching the Chancellor's Budget announcement. The UK's FTSE 100 index has already reacted positively to the news, with shares rising by 0.5% in early trading. The "2 up, 2 down" plan was first proposed by the Resolution Foundation think tank and had been sent to the OBR for costing earlier this month. The plan would have seen income tax rates rise by 2p, but workers would have been compensated with a 2p National Insurance cut. The decision to abandon the plan is a significant shift in the Chancellor's strategy, which had been focused on raising revenue through tax increases. The move is likely to be seen as a victory for those who had argued that breaching manifesto pledges on income tax would be a mistake. The Chancellor's Budget announcement is now expected to focus on other areas, such as public spending and welfare reforms. The exact details of the Budget are still unclear, but it is expected to be announced in the coming weeks. In the meantime, the UK's public finances will continue to be closely watched, with the OBR's revised projections providing a more optimistic outlook for the economy. The decision to abandon the income tax rise plan is a significant development, and one that will have far-reaching implications for the UK's economic strategy.