London, November 27, 2025
Chancellor Rachel Reeves delivered the UK Autumn Budget on November 26 amid escalating fiscal pressures marked by soaring borrowing and rising national debt. The budget response aims to address constrained options shaped by manifesto commitments, economic challenges, and self-imposed fiscal rules.
Sharp increase in borrowing and debt levels
Government borrowing in September 2025 rose to £20.2 billion, the highest for that month in five years, according to the Office for National Statistics. This surge contributed to public sector net debt reaching 95.3% of GDP, a threshold not seen in over six decades. For the first half of the financial year, borrowing totaled £99.8 billion, exceeding forecasts from the Office for Budget Responsibility and amplifying pressure on the Treasury to restore fiscal stability.
Constraints limiting fiscal maneuvering
The scale of last year’s £40 billion tax increases has set expectations that Chancellor Reeves will avoid repeating such measures. However, weak economic growth, climbing debt interest costs, and new expenditure commitments have severely limited the scope for additional fiscal stimulus or broad tax hikes. Politically, the Labour Party’s manifesto explicitly rules out raising National Insurance, Income Tax rates, or VAT on working individuals, preserving protections for lower and middle-income earners but narrowing revenue-raising avenues.
Reeves has also pledged to adhere to a series of fiscal rules designed to constrain day-to-day government spending and to ensure that debt as a share of GDP declines by the end of the current Parliament. These self-imposed limits further restrict budget flexibility and complicate efforts to balance growth support against fiscal responsibility.
Policy focus on wealth and pension taxation
In response to these challenges, officials have suggested that the budget will target taxation measures focused on wealthier individuals and specific fiscal bases. Potential reforms include adjustments to inheritance tax, capital gains tax, property taxes, and pension-related reliefs. Pensions are viewed as a likely area for generating revenue, identified within Treasury circles as comparatively accessible reform territory.
Significance of the delayed budget timing
The Autumn Budget’s announcement on November 26 was postponed from the usual late October or early November schedule. This delay was intended to provide the Office for Budget Responsibility with extended time to incorporate updated economic and borrowing data, underscoring the complexity and evolving nature of the fiscal outlook. The Chancellor’s statement followed Prime Minister’s Questions in the House of Commons, emphasizing the high-profile nature of the occasion.
The latest figures and policy constraints underscore the narrow path Chancellor Reeves must navigate to meet her fiscal commitments while honoring political promises. How the government balances these demands will have significant implications for the UK’s economic trajectory in the remaining parliamentary term.