Mon, 29 Sep 2025

Mon, 29 Sep 2025 Faisal Islam: Reeves pre-emptively justifies tax rises

The chancellor linked tough decisions "in coming months" to global headwinds and OBR productivity reassessment.

* Chancellor Rachel Reeves floated a pre-emptive argument for possible tax rises in her November Budget, blaming global headwinds and long-term damage to the UK economy.
* She cited trade wars, actual wars, and rising government interest rates as contributing factors to the need for tough decisions.
* The Office for Budget Responsibility's (OBR) reassessment of the UK's long-term economic trends will reveal "ever clearer" evidence of "long-term damage", which she attributes to her predecessors' record.
* Reeves emphasized the importance of responsible management of public finances and hinted at potential changes to tax policies, including a review of the OBR's forecasting process.
* She confirmed that the government is considering changing the fiscal dance with the IMF, which could reduce speculation about tax changes.
* The Treasury wants to protect pay packets and "not put up prices in shops", suggesting that a straightforward rise in VAT may not be on the table.
* Options for bridging the gap in public finances include scrapping tax breaks and allowances, extending the freeze on tax thresholds, or introducing new taxes.
* The OBR's revised forecast will be presented to Reeves on Friday, after which she will begin translating tax proposals into a Budget.
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