By Eamon Shahir

With public sector borrowing reaching £83.8 billion in the first five months of 2025-26, £11.4 billion above Office for Budget Responsibility forecasts, Keir Starmer’s government faces mounting pressure to deliver fiscal stability.

Labour's response? A fundamental misunderstanding of Britain's economic challenges. Rather than confronting the structural inefficiencies bleeding taxpayer money, Labour has chosen the politically expedient path of chasing higher taxes from businesses and wealthy individuals.

This strategy is not just economically damaging but spectacularly self-defeating. By targeting a finite pool of mobile wealth while ignoring systematic waste across government departments, Labour is simultaneously shrinking the tax base it depends on and failing to address the root causes of fiscal pressure.

The numbers tell a stark story: with Total Managed Expenditure at £1.229 billion, even modest efficiency improvements would dwarf any conceivable revenue from tax raids.

The government's fixation on extracting more from high earners and businesses ignores basic economic reality. Wealth is mobile, investment is discretionary, and entrepreneurial talent flows to jurisdictions that welcome rather than penalise success.

Every tax rise creates its own opposition force through capital flight, reduced investment, and behavioural changes that erode the very tax base being targeted. When running costs and income tax exceed profit margins, exit becomes inevitable.

We're already witnessing this dynamic in practice. The 14.5% drop in buy-to-let mortgages represents the systematic elimination of the UK's most compliant property tax base as amateur landlords exit a market where regulatory and tax burdens have made operations unviable.

This isn't market evolution but regulatory capture through tax complexity, inadvertently creating a compliance moat that protects institutional players........

© LBC