Rachel Reeves Signals Tax Rises, Spending Cuts Ahead

Published: 15 October 2025. The English Chronicle Desk. The English Chronicle Online.

Chancellor Rachel Reeves has warned that both tax rises and spending cuts are being considered for the upcoming autumn budget, as the government confronts a deepening hole in the public finances. Reeves attributed the growing fiscal strain partly to the lingering economic consequences of Brexit, combined with the effects of austerity and the turmoil caused by Liz Truss’s 2022 mini-budget.

Speaking in an interview with Sky News, Reeves confirmed that “tax and spending” decisions were on the table as she prepares to deliver her 26 November budget statement. Emphasising fiscal discipline, she declared: “The numbers will always add up with me as chancellor, because we saw just three years ago what happens when the Conservatives lost control of the public finances — inflation and interest rates went through the roof.”

Pressed on whether Brexit was to blame, Reeves said the economic impact of leaving the EU had been “severe and long-lasting,” pointing out that most economists expected the UK economy to be about 4% smaller as a result. She said her government was now trying to “undo some of that damage” by rebuilding ties with Europe, citing new arrangements on food, farming, youth mobility, and energy trading.

Reeves outlined her determination to be the “chancellor that gets stuff built in Britain”, vowing to accelerate major infrastructure projects through planning reform. She said the government’s forthcoming planning and infrastructure bill — which she described as “probably the biggest piece of legislation that this government passes in the whole of this parliament” — would prioritise progress over bureaucracy.

To illustrate the scale of the challenge, Reeves pointed to the Lower Thames Crossing project between Kent and Essex, which she said had accumulated a 350,000-page planning application. “That’s longer than the complete works of Shakespeare,” she remarked. “For getting a road built across the Thames, that is not acceptable. We used to be able to do things faster in the past.”

The upcoming budget is shaping up to be Labour’s toughest fiscal test yet. Economists estimate a shortfall of around £50 billion, worsened by weak productivity, persistent inflation, and mounting debt costs. The chancellor faces additional financial pressure after the government’s decision to reverse cuts to winter fuel payments and abandon welfare reductions, leaving a £6 billion gap.

The Office for Budget Responsibility (OBR) is also expected to downgrade productivity forecasts, further complicating the Treasury’s task. Reeves acknowledged that the OBR had “consistently overestimated” the UK’s productivity in the past and warned that any adjustment would make balancing the books more difficult.

While she refused to rule out tax increases, Reeves stressed that sustainable economic growth was the only long-term solution to restoring fiscal health. “It’s growth that brings in the tax revenues to afford to keep taxes low and invest in our public services,” she said. However, she admitted that weak growth had created a “doom-loop” of rising taxes and spending constraints that she was determined to break.

Despite these challenges, Reeves highlighted positive indicators, including data showing the UK as the fastest-growing economy in the G7 during the first half of the year, along with signs of improving business investment. Yet she acknowledged that cost-of-living pressures remained “very real” for families and businesses.

The chancellor also reaffirmed her commitment to “builder-over-blocker” policies, promising to reduce judicial review times for major projects by six months and appoint specialist judges to handle complex cases more efficiently.

Reeves’s interview signals a pragmatic but politically risky path ahead, as the Labour government balances its growth agenda with public expectations for stability and fairness. The November budget will reveal just how far the new chancellor is prepared to go — and how much the British public will be asked to contribute — in her bid to restore order to the nation’s finances while laying the groundwork for a new era of investment-led growth.