Davey announces £17bn tax cuts tied to EU single market

Sir Ed Davey has announced a £17bn income tax cut package that the Liberal Democrats say would be funded by economic growth from the UK rejoining the EU single market and customs union. The plan would raise the tax-free personal allowance to £15,000 and lift the threshold for paying the 40p higher rate of income tax from £50,270 to £56,000, delivering what Davey described as a £680 cut for most taxpayers. The proposals, unveiled in a keynote speech to the party conference in Brighton on September 22, 2026, would not take full effect until the fifth year of a Liberal Democrat government, potentially up to eight years away. The party said it would unfreeze personal allowances in the second year of government, allowing them to rise with inflation, before introducing the larger tax cuts in year five once the economic benefits of closer EU trade had materialised. Davey insisted the package would require no extra borrowing, no spending cuts and no tax rises elsewhere. He said the plan would be paid for from the dividends of growth generated by closer trade with Europe, with the party claiming an extra £27bn would come from a proposed growth and defence pact with the EU.