UK Chancellor Rachel Reeves delivered an unusual pre budget address from Downing Street this morning, giving the clearest indication yet that tax rises are coming in her Autumn Budget later this month when she declined to recommit to Labour’s manifesto pledges not to raise income tax, national insurance or Value Added Tax (VAT). The speech focused on fairness and opportunity while emphasizing pressures on public finances that needed addressing.
Reeves told the British public she wants people to understand the circumstances facing the country, the principles guiding her choices, and why she believes they will be the right decisions for years to come. The Chancellor said each person must do their bit and warned millions that everyone will have to contribute towards repairing public finances.
The Chancellor stated her budget choices this month will focus on getting inflation falling and creating conditions for interest rate cuts to support economic growth and improve the cost of living, emphasizing that previous governments have not adequately faced up to these challenges. She noted the world has thrown even more challenges in the last twelve months, with continual tariff threats dragging on global confidence, deterring business investment and dampening growth.
Financial experts have interpreted the speech as clear signaling of imminent tax rises. Nigel Green, chief executive of international financial advisory firm deVere Group, characterized the finance minister’s silence on specific tax pledges as deliberate choreography rather than hesitation. He noted that governments test language carefully before acting, and when ministers refuse to repeat categorical assurances, the message is clear about forthcoming tax rises.
UK government borrowing reached £20.2 billion in September 2025, marking £1.6 billion more than September 2024 and representing the highest September borrowing since 2020. Borrowing in the financial year to September 2025 totaled £99.8 billion, which was £11.5 billion more than the same six month period in 2024 and the second highest April to September borrowing since monthly records began in 1993, after that of 2020.
Britain’s government borrowed £7.2 billion more than forecast in the first six months of the fiscal year, overshooting the £92.6 billion forecast by the Office for Budget Responsibility (OBR) in March. The primary driver of the worsening fiscal picture was a sharp increase in debt interest costs, with September payments alone surging by 66 percent to £9.7 billion.
Reports indicate the OBR is set to downgrade the UK’s productivity forecast by 0.3 percentage points at the end of this month, potentially increasing the chancellor’s financial gap by an additional £20 billion. The Resolution Foundation has estimated that as a result, Reeves will need to raise at least £25 billion in taxes to balance the books.
The Chancellor is reportedly considering a proposal from the Resolution Foundation to raise income tax by two pence per pound while cutting national insurance by the same amount, a measure framed as a switch plan to iron out unfairness in the system by spreading the tax burden across a wider group including pensioners and landlords. Such a move would represent a clear breach of Labour’s election manifesto pledge not to raise income tax, VAT or national insurance for working people.
Green from deVere Group warned that the most likely targets in a fiscal squeeze include freezes to inheritance thresholds, reductions in higher rate pension relief, tighter dividend allowances, or alignment of capital gains with income tax, measures that can be described as modernization but amount to heavier burdens on savers and investors. He noted his firm has already seen a sharp increase in clients reviewing their positions ahead of the budget.
The Chancellor faces difficult choices after pledging to stick rigidly to her fiscal rules ensuring day to day government spending is funded by tax revenues and not borrowing, and to ensure public debt is falling as a share of economic output by 2029 to 2030. Debt interest payments are consuming more than £110 billion annually, one of the highest levels on record, while gilt yields remain historically elevated.
Shadow Chancellor Mel Stride called on Prime Minister Keir Starmer to dismiss Reeves if she hikes taxes, having said last year she would not be coming back for more taxes after delivering what she called a once in a parliament reset at the last budget. He stated the emergency press conference all but confirms what many feared about higher taxes on the way.
The wider implications extend beyond retirees and high income earners, as raising effective tax rates on savings, investments and pensions could depress consumer confidence, constrain domestic demand and risk driving mobile capital elsewhere while potentially undermining Britain’s credibility as a stable investment jurisdiction. The Chancellor will deliver her statement on November 26, when specific tax measures and their impacts will be confirmed.
