Rachel Reeves is a “gnat’s whisker” away from having to raise taxes in the autumn budget, a leading economist has warned – despite the chancellor insisting her plans are “fully funded”.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), said “any move in the wrong direction” for the economy before the next fiscal event would “almost certainly spark more tax rises”.

‘Sting in the tail’ in chancellor’s plans – politics latest

Speaking the morning after she delivered her spending review, which sets government budgets until 2029, Ms Reeves told Wilfred Frost hiking taxes wasn’t inevitable.

“Everything I set out yesterday was fully costed and fully funded,” she told Sky News Breakfast.

Her plans – which include £29bn for day-to-day NHS spending, £39bn for affordable and social housing, and boosts for defence and transport – are based on what she set out in October’s budget.

That budget, her first as chancellor, included controversial tax hikes on employers and increased borrowing to help public services.

Chancellor won’t rule out tax rises

The Labour government has long vowed not to raise taxes on “working people” – specifically income tax, national insurance for employees, and VAT.

Ms Reeves refused to completely rule out tax rises in her next budget, saying the world is “very uncertain”.

The Conservatives have claimed she will almost certainly have to put taxes up, with shadow chancellor Mel Stride accusing her of mismanaging the economy.

Taxes on businesses had “destroyed growth” and increased spending had been “inflationary”, he told Sky News.

New official figures showed the economy contracted in April by 0.3% – more than expected. It coincided with Donald Trump imposing tariffs across the world.

Ms Reeves admitted the figures were “disappointing” but pointed to more positive figures from previous months.

Read more:
Chancellor running out of levers to pull
Growth stats make for unpleasant reading
Your spending review questions answered

‘Sting in the tail’

She is hoping Labour’s plans will provide more jobs and boost growth, with major infrastructure projects “spread” across the country – from the Sizewell C nuclear plant in Suffolk, to a rail line connecting Liverpool and Manchester.

But the IFS said further contractions in the economy, and poor forecasts from the Office for Budget Responsibility, would likely require the chancellor to increase the national tax take once again.

It said her spending review already accounted for a 5% rise in council tax to help local authorities, labelling it a “sting in the tail” after she told Sky’s Beth Rigby that it wouldn’t have to go up.

The UK has called for restraint and diplomacy after Israel launched airstrikes on Iran early on Friday.

The Israeli military said a “pre-emptive, precise, combined offensive based on high-quality intelligence” had been launched against targets in Iran – called Operation Rising Lion.

Follow latest: Israel attacks Iran’s nuclear sites

According to Iranian state media, six nuclear scientists were killed in Israel’s strikes. An Israeli military spokesperson said Iran had launched more than 100 drones towards the country.

In a statement, Prime Minister Sir Keir Starmer urged “all parties to step back and reduce tensions urgently”.

He added: “Escalation serves no one in the region. Stability in the Middle East must be the priority and we are engaging partners to de-escalate.

“Now is the time for restraint, calm and a return to diplomacy.”

Foreign Secretary David Lammy added that “this is a dangerous moment” and said “stability in the Middle East is vital for global security”.

The US said it had not been involved in Israel’s attack on Iran, and warned against any retaliation targeting American interests or personnel.

US President Donald Trump had previously urged Israeli Prime Minister Benjamin Netanyahu not to attack Iran while Washington negotiates a nuclear deal with the country.

Speaking to Sky News, British industry minister Sarah Jones said the UK was also not involved in the Israeli military operation.

Read more from Sky News:
Charges over Ballymena riots
MPs to vote again on assisted dying – will it pass?
Everything we know about the Air India plane crash

Follow The World

Listen to The World with Richard Engel and Yalda Hakim every Wednesday

Tap to follow

Asked if Israel was right to say that it had no choice but to carry out dozens of airstrikes on Iranian military sites overnight, Ms Jones said: “I don’t think anybody questions how destabilising Iran is being.”

“This is escalating, not de-escalating the situation. And we would urge restraint,” she added.

“We need to be calm at this point, work with our allies, do what we can to stop escalation, because we do not believe escalation is going to be helpful in the region or the wider, wider world, of course.”

The minister said the “foreign secretary will say more in due course”.

Air India has confirmed that 241 people on board a flight to London Gatwick have died after the aircraft crashed shortly after take-off – with just one person surviving.

The Boeing 787-8 Dreamliner, which was carrying 53 Britons, crashed into a doctors’ hostel in a residential area moments after taking off from Ahmedabad airport, in western India.

India plane crash latest: Follow live updates

Air India has said 229 passengers and 12 crew died. Authorities have not confirmed how many people on the ground were killed or injured.

The airline said it “offers its deepest condolences to the families of the deceased”.

“Our efforts now are focused entirely on the needs of all those affected, their families and loved ones,” the statement continued.

The sole survivor is British man Vishwash Kumar Ramesh, who was travelling on the flight with his brother.

He told the Hindustan Times newspaper he heard a “loud noise” around 30 seconds after take-off before the Boeing 787-8 Dreamliner went down.

“It all happened so quickly,” he said, adding that he suffered “impact injuries” to his chest, eyes and feet. “When I got up, there were bodies all around me. I was scared. I stood up and ran.”

The passengers included 169 Indian nationals, 53 British nationals, seven Portuguese nationals and one Canadian national.

In a statement posted on Facebook, Gloucester Muslim Community said Akeel Nanabawa, his wife Hannaa and their four-year-old daughter Sara had died in the crash.

They said: “No words can truly ease the pain of such a profound loss, but we pray that the family may find solace in the tremendous outpouring of compassion and solidarity from communities across the world.”

Also on the flight were married couple Fiongal and Jamie Greenlaw-Meek from west London. They had posted a video from the airport on their Instagram feed shortly before boarding.

Videos show the aircraft, which departed from Ahmedabad to London Gatwick at 1.38pm local time, struggling to gain altitude in the seconds after taking off.

It then begins to descend and a fireball can be seen as the plane crashes, with massive plumes of thick black smoke rising into the sky.

Other images show the aircraft’s tail after it crashed into the roof of the BJ Medical College Hostel in the Meghaninagar area.

Tata Sons, which owns the airline, said it will give around £86,000 to the families of each person who died, cover the medical expenses of those injured, and provide support to rebuild the medical hostel.

Ahmedabad airport said the plane crashed “shortly after take-off, outside the airport”. Flights were suspended until shortly after 4pm local time.

In a statement, London Gatwick said the flight was due to land at 6.25pm UK time on Thursday and a reception centre for relatives of those on board was set up where information and support will be provided.

Flight tracking website Flightradar said a signal was last received from the aircraft less than a minute after take-off.

It is the first ever crash of a Boeing 787 Dreamliner, according to the Aviation Safety Network database.

The model, a widebody, twin-engine plane, has made five million journeys in the 14 years since its first passenger flight.

Read more:
What we know so far
Investigators will want to know if crash part of wider problem
CCTV shows take-off and fireball explosion
Aviation experts review crash video

Sir Keir Starmer said the scenes emerging were “devastating”. He added: “Our hearts and our thoughts are absolutely with the friends and families of all of those affected.”

The prime minister said the British government is in “constant contact” with the Indian authorities and has dispatched an investigation team of its own.

The King said he and the Queen were “desperately shocked by the terrible events” in a post on X.

“Our special prayers and deepest possible sympathy are with the families and friends of all those affected by this appallingly tragic incident across so many nations, as they await news of their loved ones,” he said.

The foreign office said the UK is “working with local authorities in India to urgently establish the facts and provide support to those involved”.

British nationals who require consular assistance are advised to call 020 7008 5000, while Air India has set up hotlines to provide information on 1800 5691 444 for those calling within India and +91 806 2779 200 for foreign nationals.

India’s prime minister Narendra Modi said in a post on X: “The tragedy in Ahmedabad has stunned and saddened us.

“It is heartbreaking beyond words. In this sad hour, my thoughts are with everyone affected by it.”

India’s civil aviation minister Ram Mohan Naidu Kinjarapu said he was “shocked and devastated” to learn about the crash.

“We are on highest alert,” he said. “I am personally monitoring the situation and have directed all aviation and emergency response agencies to take swift and coordinated action.

“Rescue teams have been mobilised, and all efforts are being made to ensure medical aid and relief support are being rushed to the site.”

Aviation expert Julian Bray told Sky News he understands the pilot managed to make a mayday call, meaning the crew was aware of a problem before the crash.

Air India was acquired by Tata Group from the Indian government in January 2022 after racking up billions of pounds of losses.

The group now operates more than 8,300 weekly flights on 312 routes, connecting more than 100 domestic and international destinations with a fleet of 300 aircraft.

The airline’s chairman Natarajan Chandrasekaran described the incident as a “tragic accident” and a “devastating event” and said emergency response teams were at the site.

“At this moment, our primary focus is on supporting all the affected people and their families,” he said.

“We are doing everything in our power to assist the emergency response teams at the site and to provide all necessary support and care to those impacted.”

A Boeing spokesperson said: “We are in contact with Air India regarding Flight 171 and stand ready to support them. Our thoughts are with the passengers, crew, first responders and all affected.”