Rachel Reeves, the UK Chancellor of the Exchequer, is set to present her second budget of the parliamentary term on November 26, with expectations of significant tax increases to address the country’s fiscal deficit. Since assuming office in 2024 as the first woman Treasury chief, Reeves has grappled with a struggling British economy, which despite brief growth spurts, has failed to meet earlier optimistic forecasts.

Last year, Reeves introduced several tax hikes on businesses intended to strengthen public finances, a move that has attracted criticism for its impact on economic performance. With the economy faltering again and public finances squeezed further by the lingering effects of the COVID-19 pandemic, geopolitical conflicts, and Brexit-related complications, the Chancellor faces the challenge of balancing fiscal responsibility with growth initiatives.

Economists expect Reeves to seek between £20 billion and £30 billion in additional revenues, potentially through extending the freeze on income tax thresholds, thereby broadening tax brackets and capturing more taxpayers at higher rates. Other measures being considered include a mansion tax on high-value properties and changes to capital gains taxation, as well as reforms targeting private pensions and the gambling sector.

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Despite pressures to boost public spending on healthcare, welfare, and inflation relief, Reeves has ruled out expanding general income taxes, opting instead for more targeted fiscal measures. She emphasizes the necessity of fiscal discipline to avoid undermining investor confidence and to manage rising government borrowing costs. The upcoming budget will therefore be a litmus test of her ability to restore economic stability while addressing the immediate cost-of-living challenges faced by British citizens.

As the UK economy navigates a complex return to pre-financial crisis growth levels, Chancellor Reeves aims to reassure markets and the public of the government’s commitment to sustainable development and fiscal prudence in this crucial budget cycle.​

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