UK budget speculation adds to risks for the economy

Britain’s budget rumour mill was already in full swing well before a date was set on Wednesday, with speculation about tax increases posing a further risk to confidence among businesses and households already anxious about inflation and job losses.

- William Schomberg, Reuters

Media reports have suggested finance minister Rachel Reeves is considering new taxes on home sales, ways to make more people pay income tax, changes to pensions relief and possibly new levies on banks and gambling in her annual budget, now set for November 26.

Britain grew faster than any other Group of Seven economy in the first half of 2025, but much of the momentum was driven by higher public spending and a rush by manufacturers to get ahead of US President Donald Trump's import tariffs. The public finances remain weak and analysts say Reeves will have to raise taxes by at least 20 billion pounds ($27 billion) — and possibly double that — to remain on course to hit her own fiscal targets. The Confederation of British Industry has already called on the government not to repeat last year’s tax increase on employers and in August linked a fall in confidence, investment and activity among services firms to short-term uncertainty.

Last month, the Royal Institution of Chartered Surveyors said talk of new taxes on home sales was causing concern, while some analysts believe a surprise dip in house prices reported this week might be a sign of weakness to come.