UK Budget: When will Rachel Reeves announce the UK Budget? What does it mean for Scotland? What to expect?
Rachel Reeves will unveil her tax and spending plans in the Commons
After weeks of speculation, Chancellor Rachel Reeves is finally due to unveil her tax and spending plans in the House of Commons.
The UK Budget will provide an update on the state of the economy and public finances, as as well as setting out any tax changes.
It is probably the most important date in the political calendar - and this year’s statement will be particularly crucial.
Not only is there a multi-million pound gap in the public finances, but Ms Reeves is grappling with internal discontent and a country increasingly unhappy with her government.
When is the Budget?
Ms Reeves is due to deliver her second Budget in the Commons on Wednesday. The statement will take place around 12:30pm, straight after Prime Minister’s Questions.
Reaction from business groups and lobbyists will be almost instantaneous, so expect a flurry of news stories.
The Office for Budget Responsibility (OBR) will publish its economic and fiscal outlook on the same day, providing an independent analysis of the UK’s economic and fiscal situation.
Economic growth forecasts are expected to be downgraded, adding a further headache for Ms Reeves.
Why does it mean for Scotland?
Powers over some tax and spending decisions - such as income tax rates and thresholds - are devolved to Holyrood, and the Scottish Government will set out its own Budget on January 13.
However, many of the decisions taken by Ms Reeves will apply across the UK, and others will have a huge impact on Scotland.
For example, the North Sea oil and gas sector is desperate for changes to the windfall tax, while the lucrative whisky industry wants a freeze on spirits duty. Fuel duty also applies across the UK.
READ MORE: Failure to scrap windfall tax will 'sound death knell' for North Sea oil, Rachel Reeves told
Elsewhere, the Chancellor is expected to freeze income tax thresholds, potentially dragging around 1.75 million people into paying more to the Exchequer.
This would only apply to taxpayers in England, Wales and Northern Ireland. But due to the way the allocation of resources is calculated, it would mean less money funnelling north to Scotland.
The Scottish Government receives a block grant from Westminster, which makes up its largest revenue source. The decisions taken by Ms Reeves will have a direct impact on this.
There is also an obvious political element to the Budget. The next Holyrood election is just a matter of months away, and Scottish Labour leader Anas Sarwar will be desperate for a positive story to tell voters.
So, what can we expect?
Ms Reeves has long suggested she will have to hike taxes to fill a black hole in the public finances, and is now facing the prospect of a downgrade in the Budget watchdog’s economic growth forecast for every year of this Parliament.
That means some uncomfortable decisions will have to be made.
There was a lot of noise about a potential income tax hike, but this appears to have been ditched amid fears of a backbench rebellion. Nevertheless, tax rises of some kind are inevitable. As mentioned above, freezing income tax thresholds is an obvious option.
Reports suggest Ms Reeves could hit more than 100,000 high-value properties with a so-called “mansion tax” - a levy that applies to those worth more than £2 million. This is a devolved area, but like everything else, it could have an impact on Scotland.
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