Chancellor of the exchequer Rachel Reeves said she was raising UK taxes by 40 billion pounds ($51.8 billion) and set out plans to ramp up borrowing to invest, to cover a fiscal hole she said was left by the previous Conservative govt and to deliver on her Labour Party‘s election promise to begin a decade of national renewal.
In a make-or-break moment for both Reeves and new Prime Minister Keir Starmer, the chancellor of the exchequer announced a budget that will raise taxes by the most in at least 30 years – when former Conservative chancellor Norman Lamont was also trying to restore economic stability.
“The scale and seriousness of the situation that we have inherited cannot be underestimated,” Reeves said in the House of Commons on Wednesday, the first female chancellor to deliver a budget in the 800-year history of the role. “Any chancellor standing here today would face this reality, and any responsible chancellor would take action. That is why today I am restoring stability to our public finances and rebuilding our public services.”
In a major move, Reeves increased the national insurance payroll tax for businesses by 1.2 percentage points to 15% from April 2025, while also reducing the threshold at which companies start paying the tax. She said that would raise 25 billion pounds by the end of the Parliament. Reeves also decided to freeze fuel duty, alongside announcing an increase in the minimum wage.
She unexpectedly ended a freeze on income tax thresholds introduced by the Conservatives, and surprised many watchers by maintaining the freeze on fuel duty.
UK govt bonds surged and the pound extended losses as Reeves spoke.
