In a more recent exciting development, Rachel Reeves, the Shadow Chancellor of the Exchequer, made the announcement. The next National Budget is due on Wednesday, 26 November – so get prepared! She tasked the Office for Budget Responsibility (OBR) to kick off a 10-week process. This process will result in a brand new economic forecast that takes into account her policies. This announcement comes against a backdrop of increasing concern over government borrowing and the current state of the UK economy.
Reeves is firm on sticking to her two non-negotiable guardrails in government borrowing that she’s called her “sacred cows.” The second rule states that starting in fiscal year 2029-30, daily government spending needs to be funded by tax revenue. That translates to no more deficit spending on day-to-day costs. The second of these “Fiscal Rules” requires overall debt to be falling as a share of national income. Moreover, this reduction must be achieved by the end of this parliamentary term, defined as 2029-30. These principles are a testament to her dedication to fiscal discipline during this period of unprecedented economic instability.
The economic climate is tough, as long-term borrowing costs are at their most expensive since 1998. This spike in expenses is hitting the government’s balance sheet like a hammer, eating up the last crumb of cushion left—around £10 billion. That’s why economists are urging the government to do away with all uncertainties. They too have been calling for a rapid Budget turnaround in October to ease at least some of these stresses.
Speaking of the Government’s official forecaster, the OBR will be publishing a new baseline economic forecast towards the end of this month. Reeves’ long-term productivity forecast will be an essential measure, helping guide Reeves’ budgetary plans and financial policies. Speculation around what kind of tax increases has mounted, with all manner of proposals debated. Here’s what economists are calling for to help combat the growing economic crisis. These include a windfall tax on bank profits, different property taxes and reforms to the council tax system. The projection from the independent National Institute for Economics and Social Research think tank comes as a shock. They project that the total shortfall in public finances might leap to £50 billion per year.
As the economy keeps sinking further, economists’ warnings have only gotten louder. They show that in order to stay within her borrowing limits, Reeves will likely need to raise taxes or pass more spending reductions. This slow growth coupled with increasing inflation has made these fiscal conversations more difficult and complicated, creating an even greater need for swift action.
In her forthcoming Budget announcement, Rachel Reeves is poised to outline the government’s taxation and spending plans aimed at funding essential public services such as hospitals, schools, military, and police. As she gears up for this monumental event, the impacts of her economic policies will surely echo across the nation.