Chancellor Rachel Reeves has signalled that tax rises and spending cuts remain possible as she prepares the November Budget to create more fiscal headroom in the medium term. At Fortune’s global forum in Riyadh, she said resilience to future shocks requires “sufficient headroom” and confirmed the Treasury is examining tax and spending alongside plans to boost growth.
Her comments suggest the £9.9 billion buffer set last year may be inadequate. When asked, Reeves did not rule out tax increases while stressing that economic growth will be “a big part of the Budget story.” The political test is whether bolstering the buffer forces a rethink of manifesto promises not to raise income tax, VAT, or employees’ National Insurance. Recent language has shifted towards keeping taxes on working people “as low as possible” rather than fixed pledges.
Pressure is mounting. The Institute for Fiscal Studies estimates a £22bn gap to meet the Government’s fiscal rules. Meanwhile, ministers are promoting the UK as a destination for Gulf investment. Reeves met Saudi royals and will join UK CEOs at the FII event. A prospective trade deal with the GCC – Kuwait, the UAE, Qatar and Saudi Arabia – is on her agenda, though official estimates suggest it would add only £1.6bn a year to GDP, less than a tenth of one percent.
Back home, the Employment Rights Bill faces House of Lords scrutiny amid warnings from the Resolution Foundation that day-one rights could dampen hiring during a weak labour market.
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