Chancellor Rachel Reeves used a rare Downing Street address to lay the groundwork for her upcoming budget, signaling that difficult tax decisions lay ahead – but she tried to pre-empt backlash by insisting the pressure on public finances was “not our fault”.
In her speech, she said the British economy was struggling not because of Labor policies, but because of “longer-term factors” such as Brexit, decades of Conservative austerity and rising global borrowing costs. “We have to deal with the world as it is, not as we wish it to be,” she said.
Ms Reeves presented her upcoming tax package as a choice between “investment and hope or cuts and division”. She said she would “do what is right and not what is popular” with a focus on protecting the NHS, reducing the national debt and improving the cost of living. However, she also acknowledged that the necessary measures could be painful for taxpayers – particularly the “wealthy” and property owners – and could have consequences “for years to come.”
With public finances set to be weaker than expected, analysts estimate it may need to raise in the region of £20 billion to £30 billion in additional revenue despite historic tax rises last year.
Ms Reeves stressed that future tax decisions would not be taken lightly: “Any chancellor of any party would be faced with the decisions I am here,” she said, placing the blame squarely on previous governments and global shocks rather than her own policies.
In particular, she argued that a barrage of international headwinds – from US tariffs and conflicts in Europe to supply chain disruptions and rising borrowing costs – had undermined Britain’s growth prospects. “The world has changed,” she said, “and we are not immune to that change.”
Although it reiterated the manifesto’s promise not to increase VAT or tax workers’ payrolls, it refrained from committing to not increasing income tax or changing thresholds – leaving open the possibility of a “wealth tax” or an increase in capital taxes.
Opposition parties seized on the comments and warned that Ms Reeves was setting the stage for a major tax crackdown under the guise of responsible budgeting. The Conservatives argued that the Chancellor was blaming others for her own demands.
With the next Budget scheduled for November 26, 2025, markets will be watching closely. Ms Reeves warned that the UK’s borrowing costs could rise further if lenders and investors doubted their commitment to fiscal rules – potentially leading to even deeper cuts or higher taxes.
In summary, the Chancellor has raised expectations of difficult decisions while making it clear that she will not be the only one responsible, but will shift the blame onto Brexit, austerity and global chaos. Whether the public accepts this formulation – and whether its fiscal package will bring growth alongside the pain – remains the crucial question.
