The UK’s tax burden is on track to rise sharply over this Parliament, even as similar countries hold steady or cut back the share of money taken from households and businesses. According to the International Monetary Fund (IMF), British Government revenues – largely from taxes – are set to account for 40.6% of GDP by 2029, up from 38.3% in 2024 when Labour took power.
This increase of 2.3 percentage points is far in excess of anything seen in other large democratic economies. It equates to around £65bn of additional tax when measured in today’s prices. The forecast comes even before next month’s Budget, in which Chancellor Rachel Reeves is expected to again raise the burden on families and businesses by tens of billions of pounds.
The next biggest increase is predicted in Germany, where the IMF said the tax burden is on course to rise by 1.3 percentage points to 48.1% of GDP between 2024 and 2029. Under Donald Trump, US taxes are projected to creep up only slightly over the same period. France’s tax burden is expected to remain steady at 51% while Italy, Canada and Japan will all reduce taxes as a share of their economies over the rest of this decade, according to the IMF.
Martin Beck, chief economist at WPI Strategy, said the rapidly rising burden risked harming Britain’s “long-term productivity and international competitiveness.” He warned: “The productivity-sapping effect of ever-higher taxes threaten to make the UK even more of a laggard. It also signals that the UK is leaning more on revenue-raising than on growth-friendly reforms to address its fiscal problems, a stance that could weaken its long-term productivity and international competitiveness.”
