UK tax hikes to address 'black hole' in public finances

Britain's finance minister has set out a budget which will increase taxes by £40 billion as she promised to "fix the foundations" of the economy and repair the public finances.

In the first Labour budget since 2010 - and the first ever delivered by a woman - Rachel Reeves promised to "invest, invest, invest".

But she said the "black hole" left by the Conservatives required tens of billions of additional taxes.

Ms Reeves claimed the scale of the public spending problems she inherited were worse than previously thought.

She said the £22 billion "black hole" left by the Tories in this year's finances showed they "hid the reality of their public spending plans", with problems recurring in future years.

Ms Reeves also promised to set aside £11.8 billion to compensate those affected by the infected blood scandal and £1.8 billion to compensate victims of the Post Office Horizon scandal.

The Chancellor of the Exchequer said: "Together, the black hole in our public finances this year, which recurs every year, the compensation payments which they did not fund and their failure to assess the scale of the challenges facing our public services means this Budget raises taxes by £40 billion."

She also announced that Britain's economy will grow faster than forecast this year and next.

The UK's gross domestic product will expand 1.1% in 2024 and next year by 2.0% - above estimates given in March by the Office for Budget Responsibility, Britain's fiscal watchdog.