In a statement confirming the date of the fiscal event, Rachel Reeves said: “Britain’s economy isn’t broken. But I know it’s not working well enough for working people. Bills are high. Getting ahead feels tougher. You put more in, get less out. That has to change.”
Reeves said the government had already “started tearing up planning rules” to build one-and-a-half million new homes, raised minimum wage and promised billions for the country’s infrastructure, but added that she was “not satisfied” and there was “more to do”.
She added: “Cost-of-living pressures are still real. And we must bring inflation and borrowing costs down by keeping a tight grip on day-to-day spending through our non-negotiable fiscal rules. It’s only by doing this can we afford to do the things we want to do.
“If renewal is our mission and growth… our challenge, investment and reform are our tools.”
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Rising gilt yields mean tougher decisions
With long-term gilt yields rising to a 27-year high, industry figures said this could mean tougher decisions for the government to fund the public purse.
It has already been speculated that there could be changes to inheritance tax gifting allowances, the introduction of a new tax on homeowners of higher-value properties and National Insurance applied to landlords’ rental income.
Ruth Curtice, chief executive of the Resolution Foundation, said: “With higher gilt yields currently adding over £3bn to debt interest costs and over £6bn of policy U-turns announced since March, the Chancellor is already on track to miss her fiscal rules. With a growth downgrade also likely, significant fiscal tightening will be needed.
“The Chancellor should use this Budget to set out her tax strategy as well as raise revenue. While tax rises are likely to be necessary, this should aim to ensure they make the system fairer and more efficient, supporting higher growth and lower inequality.”
Richard Carter, head of fixed interest research at Quilter Cheviot, said higher borrowing costs for the state meant it was “more expensive to finance existing debt and harder to fund new spending”.
He added: “For the public, that translates into tougher fiscal choices for the government, with less room to ease the tax burden or boost investment.
“This only adds to the headache facing Rachel Reeves as she prepares her second budget, with markets making clear that borrowing to fill the black hole in the public finances will be difficult and may ultimately point to further tax rises.”
Carter said the “broader picture is one of tight fiscal constraints, rising borrowing costs and the risk that without stronger growth the government ends up trapped in a cycle that is hard to escape”.
He added: “Rachel Reeves has committed herself to her fiscal rules, and while these have been loosened once already, there is likely little appetite for further easing just so she can claim to have met targets. Tax rises are bad for growth, and with little room for additional borrowing, it leaves spending cuts as one of the only future viable options. With a Labour government already cowed by its own backbenchers, those cuts are unlikely to materialise unless the market forces it to change tack. There is likely some more volatility to come in bond yields as a result.”
A long wait for certainty
Rebecca Williams, divisional lead of Financial Planning at Rathbones, said the 26 November date felt like a “rather late fiscal event”, adding that “with public finances stretched thin, the delay underlines that ministers are in full-on thinking mode ahead of what is shaping up to be one of the most consequential Budgets in a generation”.
She added: “It seems inevitable that some form of tax rises – stealth or otherwise – will be unveiled as the government looks to balance the books.
“For households, the long wait only prolongs uncertainty at a time when many are still grappling with the cost-of-living squeeze. Markets and savers alike dislike being left in the dark, and it is little wonder we’ve seen a surge in queries around pensions taxation, estate planning, and whether it remains worthwhile to hold on to buy-to-let properties amid growing speculation.
“But while it is sensible to keep an ear to the ground, it is important to remember that headline announcements grab the spotlight while quieter changes – such as freezes to allowances – can be just as impactful over time. Whatever the shape of the Chancellor’s statement, it remains good practice to avoid knee-jerk reactions based on rumour.
“This period of waiting can be used productively: to review budgets, shore up financial resilience, and stress test long-term plans.”
Jonathan Stinton, head of mortgage relations at Coventry Building Society, said that the lead up to the budget was not a problem for sales going through currently, but could cause future buyers to drag their feet in case stamp duty was abolished.
“Ultimately, if you’re in the middle of buying or selling a property now, this speculation could add weeks onto the process and put some sales and some chains at risk,” he added.
He said with potential changes to capital gains tax on the sale of higher-value properties, sellers could be tempted to rush transactions before any changes came in.
Stinton said: “Until these rumours are either quashed or implemented, it’s going to be a frustrating time for people who just want to move home. 10 weeks is a long time to wait to find out if these changes are real. When tax reforms of this scale come in, there are always winners and losers – the Treasury can’t expect anyone to carry on as usual when thousands of pounds could be at stake.
“We’ve been calling for reform of property tax for a long time, and any significant change will need time to settle in. But drip-feeding policy ideas months ahead of time is unhelpful for everyone.
“What the housing market needs most right now is clarity. There are very real consequences of all this speculation – it leaves people guessing, and the housing market doesn’t really thrive on guesswork. Treasury should either quash the rumours or set out the detail, so buyers, sellers and the market know what to prepare for.”
