Wed, 03 Sep 2025

Wed, 03 Sep 2025 Faisal Islam: Reeves has a bumpy road up to the Budget

The chancellor hits back at speculation over tax rises, but will need to find the money from somewhere.

* Chancellor Rachel Reeves aims to make structural reforms to boost economic productivity and growth, rather than just raising taxes to fund public services.
* She insists that she will be in charge of the Budget process, working "in lockstep" with Number 10.
* The Treasury is facing a significant gap in the public finances, which Reeves downplays as a "$50bn black hole".
* Tax rises on property, banks, and pensions are dismissed by Reeves as "wrong" and "irresponsible" speculation.
* There may be some tension between the Treasury and the Office for Budget Responsibility (OBR) over their economic forecasts.
* Reeves is likely to stick to her fiscal rules around borrowing, but there will be pressure from backbenchers to fudge them.
* Welfare cuts are not ruled out by Reeves, and she may struggle to deliver on her promise to help bring inflation down.
* The bond markets are sending a warning signal that they can be powerful forces in shaping the economy.
* The upcoming Budget on November 26 will be a "rough ride" for Reeves.
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