Rachel Reeves, the new Chancellor of the Exchequer, has confirmed the date for the next Budget. Note that it is going to be held on Wednesday, 26 November. She has instructed the Office for Budget Responsibility (OBR) to begin a statutory 10 week process. From there, they will develop an entirely new economic forecast to fit with her fiscal policies. This forecast will heavily shape the government’s future taxation and spending plans. It arrives at an especially fortuitous moment as we endure a shifting but continuing economic crisis.
Reeves’ confirmation precedes a run-up in long-term borrowing costs, which now stand at their highest levels since 1998, adding further stress to government finances. In light of this, she has established two non-negotiable rules regarding government borrowing: first, that day-to-day government expenses must be funded through tax income by the fiscal year 2029-30, and second, that national debt must begin to decline as a share of national income by the end of the current parliamentary term in 2029-30.
With rising long-term borrowing costs consuming much of the government’s limited financial buffer—estimated at around £10 billion—Reeves faces significant challenges ahead. The National Institute for Economics and Social Research projects a €60 billion hole in public finances. If unaddressed, this gap could grow to £50 billion annually. Economists have warned that maintaining her borrowing rules will necessitate either tax increases or spending cuts, given the sluggish growth and rising inflation rates currently impacting the economy.
The OBR is due to provide a new, much-anticipated, baseline forecast for the UK later this month. This new forecast should be an important test of long-term productivity. This data will undoubtedly help inform Reeves as she develops her new government’s taxation and spending blueprint. These plans will pay for other public services too—hospitals, schools, military deployments, police departments.
Speculation about what further tax increases might look like has heated up in recent weeks. Here are some of their suggested new measures to keep an eye on. These are providing support by introducing a windfall tax on bank profits and council tax reform. The urgency around these decisions has fueled calls for a quick turnaround on the Budget in early October. This is a welcome gesture to help reduce concerns over what changes might happen.
…sharp navy blue suit Reeves wore to announce her news. She finished her look with a remembrance poppy on her lapel and an eye-popping plum-colored blouse. She stepped in with a red box for the Autumn Budget, which is the physical manifestation of these economic plans.
The government continues to push ahead with its plans. Yet, it stands at a precarious crossroads marked by escalating public indebtedness, soaring demand for quality services, and growing political turbulence at home and abroad. Long-term borrowing costs have surged due to concerns about these issues, along with shifts in pension funds away from bonds.
The next Budget needs to be based on these realities. More importantly, the government should be focused on making public finances work for people and the economy by stabilising funding for vital public services.