Sir Keir Starmer and Rachel Reeves have ditched their manifesto-busting plan to increase income tax rates, in a dramatic U-turn ahead of the Budget on November 26 that sparked a sell-off in the gilt market.
The prime minister and chancellor have “ripped up” earlier proposals to raise the basic and higher income tax rates, according to officials briefed on the move, amid fears the move would anger voters and further antagonise mutinous Labour MPs.
Gilts sold off steeply at the open on Friday as investors balked at the U-turn, pushing the 10-year yield up 0.1 percentage points to 4.54 per cent in early trading. Yields move inversely to prices.
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