UK Chancellor Reeves Signals Tax Rises Ahead of Autumn Budget Amid £26 Billion Gap
Chancellor pledges focus on fairness and opportunity as analysts warn tax hikes likely despite manifesto commitments
Chancellor of the Exchequer Rachel Reeves is set to give a speech today signalling that tax increases are likely in the upcoming Autumn Budget, scheduled for 26 November 2025. The remarks mark a shift in tone, as she confirmed that the government’s earlier pledge not to raise taxes is now under review in light of mounting fiscal pressures.
In advance extracts of her remarks, the chancellor will say that the budget will be led by values of fairness and opportunity, and that the choices ahead must be rooted in the reality of the economic environment.
Analysts estimate that she may need to raise around 26 billion pounds to meet fiscal targets, which would mean breaching the pre-election promise not to raise income tax, value-added tax (VAT) or national insurance contributions on working people.
The UK’s fiscal watchdog, the Office for Budget Responsibility, is expected to downgrade productivity forecasts, widening the fiscal gap by as much as 9 billion to 18 billion pounds, heightening the pressure on the chancellor to identify new revenues or cut spending.
While Reeves has reaffirmed her commitment to her fiscal rules—that day-to-day spending must be funded by tax receipts and that public debt should fall as a share of output by 2029-30—she also stressed that the global environment has changed.
Despite speculation about a VAT rise, Reeves indicated that such a move would unfairly hit working households and confirmed that the manifesto pledge protecting the headline rates of income tax, VAT and national insurance remains in force, urging the public to judge her on the record.
The fiscal options believed to be under consideration include freezing income-tax thresholds, revising capital-gains and inheritance taxes, and restructuring property levies.
Market watchers and political opponents alike say the chancellor faces an agonising choice—either deliver a go-big tax-rise strategy or relax her fiscal rules and accept higher debt.
Although no decisions have been publicly announced yet, the tone of today’s speech is widely viewed as a signal of what is to come for both taxpayers and businesses.
In advance extracts of her remarks, the chancellor will say that the budget will be led by values of fairness and opportunity, and that the choices ahead must be rooted in the reality of the economic environment.
Analysts estimate that she may need to raise around 26 billion pounds to meet fiscal targets, which would mean breaching the pre-election promise not to raise income tax, value-added tax (VAT) or national insurance contributions on working people.
The UK’s fiscal watchdog, the Office for Budget Responsibility, is expected to downgrade productivity forecasts, widening the fiscal gap by as much as 9 billion to 18 billion pounds, heightening the pressure on the chancellor to identify new revenues or cut spending.
While Reeves has reaffirmed her commitment to her fiscal rules—that day-to-day spending must be funded by tax receipts and that public debt should fall as a share of output by 2029-30—she also stressed that the global environment has changed.
Despite speculation about a VAT rise, Reeves indicated that such a move would unfairly hit working households and confirmed that the manifesto pledge protecting the headline rates of income tax, VAT and national insurance remains in force, urging the public to judge her on the record.
The fiscal options believed to be under consideration include freezing income-tax thresholds, revising capital-gains and inheritance taxes, and restructuring property levies.
Market watchers and political opponents alike say the chancellor faces an agonising choice—either deliver a go-big tax-rise strategy or relax her fiscal rules and accept higher debt.
Although no decisions have been publicly announced yet, the tone of today’s speech is widely viewed as a signal of what is to come for both taxpayers and businesses.
