Reeves signals a new direction for the November budget
British chancellor Rachel Reeves has indicated that higher taxes on the country’s wealthiest will form part of the forthcoming November budget. Speaking in Washington at the IMF annual meetings, Reeves pushed back against criticism she described as scaremongering and bleating, stressing that her priority is repairing the public finances while avoiding a return to austerity.
During a conversation with the Guardian, Reeves suggested that any tax rises on the well-off would be part of a broader package designed to boost growth and shore up government accounts, particularly in light of a forecast downgrade from the Office for Budget Responsibility (OBR). She did not spell out specific measures, but she underscored that the government remains committed to its long-term investment plans and to sustaining public services without surrendering to quick-fix budgeting.
The context: growth forecasts and the OBR
Independent forecasters have warned that the public finances will look weaker in five years’ time than previously projected. The OBR’s forthcoming updates are expected to reflect that deterioration, complicating the task for Labour as it seeks to chart a fiscally responsible path. Reeves argues that a stronger economy, built on investment rather than cuts, is the route to both growth and sustainable revenue.
She pointed to previous Labour steps—such as the non-doms measure, the private equity tax, and changes to VAT on private school fees—as evidence that revenue-raising policies can be pursued without triggering a mass exodus or undermining competitiveness. The chancellor noted that the public’s response to those policies has, in her view, proven critics wrong about their impact on taxpayers and the economy.
What might be included in the package?
While Reeves avoided confirming specific proposals, she signaled a multifaceted approach. Potential options circulating in political and policy circles include adjusting capital gains tax, extending charges to rental income or to partners in professional firms, and revisiting council tax bands. There has also been talk of revising tax-free ISAs to redirect savings toward the stock market, though Reeves did not comment on those plans directly.
The government’s stated aim is to balance boosting growth with raising revenue to fund public services—while ensuring the plan does not replicate the austerity of the previous decade. Reeves has repeatedly framed the budget as a test of whether Labour can invest in people’s futures (health, housing, energy infrastructure) without yielding to the political temptations of large-scale tax cuts or stopgap spending cuts.
The political calculus: growth, bonds, and public confidence
Reeves has been keen to separate Labour’s strategy from the Conservative/ Reform government’s record on austerity and productivity. She argues that the world economy in 2025 is more volatile, with global tensions feeding through to domestic conditions. In this environment, she maintains that a credible plan—anchored in growth-friendly investment and prudent public finances—can reassure bond markets and narrow the gap between UK yields and those of other major economies.
Her emphasis on fiscal prudence includes a larger margin for error to cushion against market jitters, a stance that contrasts with earlier episodes where policy missteps reverberated through gilt yields. Reeves contends that choosing to invest in long-term assets—such as housing, energy infrastructure, and public services—will reduce costs for households over time and strengthen the country’s productive capacity.
Looking ahead: what this means for voters and markets
With the budget scheduled for 26 November, Reeves’ remarks signal a serious push to reconcile growth ambitions with responsible budgeting. For voters, the question will be whether a higher tax burden on the wealthy translates into tangible public benefits—reduced waiting lists, better schools, and more robust health and social care systems. For markets, the key test remains: can the plan lower borrowing costs and restore confidence, without triggering adverse reactions among high-income earners or their advisers?
In her own words, Reeves says transparency and honesty about the global economic backdrop are essential, and she insists that Britain can fund its priorities by sticking to a coherent, growth-oriented fiscal strategy. Whether that strategy involves higher taxes on the wealthy or other revenue-raising measures, the coming weeks will reveal how Labour seeks to balance ambition with discipline in the nation’s public finances.
