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.

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‘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 FTSE 100 has secured a new record closing high after riding out a US trade war-linked slump.

The index of London’s leading shares gained 20 points to hit 8,884, surpassing the 3 March peak of 8,771 and leaving its value more than 8.6% up in the year to date.

It was achieved despite gloomy official figures covering April – when the impact of the US trade war started to be felt, household bills spiked and budget tax and wage rises hit employers for the first time.

The Office for National Statistics reported that the economy contracted by 0.3%.

Money latest: Boeing shares suffer after India plane crash

The FTSE 100 tumbled early in the spring when Donald Trump‘s protectionist agenda gathered steam through a series of on-off tariffs against global trading partners, later exacerbated by his “liberation day” escalation.

Stock market values were hit worldwide as the consequences for domestic economies – and global activity – were digested amid a slew of output downgrades by respected international bodies such as the International Monetary Fund.

But the suspension or reductions of many trade tariffs, coupled with select deals to end hostilities with nations such as the UK, has helped values climb back since last month.

A new high for the UK’s top flight shares was almost achieved on Wednesday, as a limited trade truce between the US and China was on the table following talks in London.

But market analysts said on Thursday that the optimism was overtaken by nerves around whether the progress could be maintained and a surge, of up to 4%, in global oil prices due to growing tensions between the US and Iran.

Mr Trump has repeatedly warned the country it is at risk of airstrikes by the US and Israel if it is found not to be complying with its nuclear obligations.

A United Nations report has made such a finding – and some US personnel have been evacuated from the Middle East region as a result.

The spike in oil costs late on Wednesday, which took the Brent crude international benchmark to a two-month high, lifted the values of energy-linked shares including those of BP and Shell early on Thursday.

Precious metal miners were also doing well.

Tesco was among the winners too, gaining almost 2%, thanks to a solid set of first quarter results.

Weaker than expected US inflation figures yesterday, which kept the prospect for a summer interest rate hike by the Federal Reserve intact despite the continuing trade war, also helped prop up sentiment internationally.

The outlook for UK and global stock market values, however, is very uncertain.

FTSE 100 firms make the bulk of their earnings overseas so a deep-seated trade spat between the world’s two largest economies is particularly damaging.

The big risks to listed companies have all been related, in some way, to trade war exposure since the start of the second Trump administration.

Neil Wilson, UK investor strategist at Saxo Markets, said of the record high: “I think we have clearly seen a rotation in global equity markets as investors have for the first time in years questioned the TINATA – there is no alternative to America.

“Investors are looking elsewhere and consistently conversations with clients revolve around geographic diversification and reducing exposure to the US.

“Of course there are alternatives to the UK – we should note that while the FTSE is up over 8% YTD [year to date], the DAX has rallied almost 20%, but clearly the UK has picked more than a few crumbs.

“More than this, it’s got some attraction from a value, income and defensive perspective given the volatility we have seen and changed macro backdrop and assumptions about US exceptionalism.”

As hundreds lie dead following the latest tragedy to beset a Boeing passenger plane, it is too early to determine blame.

Pilot error, engine failure and bird strikes are among the theories all being banded about. Only the recovery of Flight AI171‘s black box flight recorders are likely to provide the concrete answers.

What is inescapable though is that this is an air disaster the plane’s maker, Boeing, could well do without.

Plane crash latest: 53 Britons on board

It sounds petty, in the midst of such a catastrophe, to be talking about the impact on a company, but this has been a civil aviation giant left deeply scarred, in the public eye, through its attitude to safety in recent years.

While the 787 Dreamliner’s record had been impressive up until today, the same can not be said for the company’s 737 MAX planes.

The entire fleet was grounded globally for almost two years following the demise of Ethiopian Airlines Flight 302 outside Addis Ababa in March 2019.

All 157 people aboard were killed.

Six months earlier, a Lion Air 737 MAX, carrying 189 passengers and crew, crashed in Indonesia.

At fault was flight control software that has since been rectified.

That recent past continues to haunt Boeing.

It took those crashes to uncover a culture of cover-up. It amounted to not only a corporate failure but one of regulation and justice too, according to critics, as relatives were denied their days in court due to plea bargains.

Just last month, the US Justice Department and Boeing agreed a non-prosecution agreement over those two fatal crashes in return for $1.1bn in fines and an admission that it obstructed the investigation.

It raises several questions over the US legal system and its ability to police corporate activity and incentivise playing by the rules.

Would a British manufacturer have been offered such a deal by US prosecutors?

As for regulation, we’re told oversight has been stepped up and the number of planes that Boeing makes is still subject to controls in a bid to boost quality.

The company has long denied putting profit before safety, but that is what almost every whistleblower to have come forward to date has alleged.

The production limits were implemented after a mid-air door plug blowout aboard an Alaska Airlines Boeing 737 MAX 9 flight in January last year.

They are hampering Boeing’s efforts to restore profitability.

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What we know so far about AI171 crash

A 5% fall in its share price at the market open on Wall Street goes to the heart of Boeing’s problem.

That is every time a Boeing plane is involved in an accident or failure, investors’ first instincts are to run for the hills.

Boeing says it is seeking more information on the nature of the Air India crash.

But whether Boeing’s plane is at fault for the loss of Flight 171 or not – and we have seen nothing so far to indicate that was the case – it’s clear the company has a long way to go to restore trust.

In a statement, Boeing president and chief executive Kelly Ortberg, said: “Our deepest condolences go out to the loved ones of the passengers and crew on board Air India Flight 171, as well as everyone affected in Ahmedabad.

“I have spoken with Air India chairman N. Chandrasekaran to offer our full support, and a Boeing team stands ready to support the investigation led by India’s Aircraft Accident Investigation Bureau (AAIB).”

Boeing will defer to India’s AAIB to provide information about Air India Flight 171, in adherence with the United Nations International Civil Aviation Organization protocol, the company added.