Welcome to the Eurointelligence podcast. I'm Wolfgang Munchau and with me are Zanne Monshank and Jack Smith.

Today we will talk about fiscal policy, the example of the UK, where there's going to be a budget this month that will very likely lead to higher taxes and will be based on broken promises.

Jackie wrote about racial reliefs budget today.

What shall we expect and what lessons does it hold?

I think what we can expect is that the budget, it's still a few weeks off,

but it seems like it's not looking great for the budget,

which is to say that we can probably expect some tax rises to come in the budget. I'm not really

sure that it's going to raise as much money as they hope. And I think what's near guaranteed by

now is that it's going to upset a lot of people politically. A lot of that has come really as a

result of political bungling from the government.

So those with long enough memories or memories that date back 18 months might remember that

before the election in the UK last summer, Labor promised not to raise taxes. They especially

promised not to raise key taxes on

income. Now, what's happened since then is that upon entering office, the labor government has

tried a couple of relatively limited spending cuts, right? So first of all, they tried to

means test winter heating allowances for pensioners, and they also

tried to pair back disability benefits. Neither of those things ultimately stuck politically.

They faced backbench rebellions from MPs on both of them, and so they had to scrap those.

So what they've looked for instead is to raise revenue on the tax side. And now they're going

through the motions of trying to maneuver around this earlier

promise not to raise income taxes, well, also basically trying to find a way to raise income taxes,

right? So one thing that they've talked about doing it, and it seems pretty certain that

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