With the United Kingdom's second autumn Budget under Labour rapidly approaching in November 2025, Chancellor Rachel Reeves is facing mounting pressure from economists, political observers, and the public to take decisive action. The stakes could hardly be higher: persistent inflation, soaring energy bills, and a daunting public finances gap have set the stage for what many are calling a make-or-break moment for the government’s economic credibility.
Calls for bold intervention have come from all quarters. As reported by multiple outlets, including The Guardian and BBC News, Reeves has been "urged to take decisive action in next month's Budget to prevent future spending cuts or tax hikes." The urgency is palpable, not just in the halls of Westminster, but in households across the country grappling with the rising cost of living.
According to pre-Budget research from the Institute for Fiscal Studies (IFS), Reeves may need to find at least £22 billion to balance the books—a figure that underscores the scale of the challenge. The IFS, a widely respected think tank, has warned that the Chancellor risks being stuck in a "Groundhog Day" scenario, where short-term fixes give way to recurring fiscal headaches. In their Green Budget document, the IFS cautioned that without structural changes, Reeves could find herself "stuck in an economic doomloop." Helen Miller, director at the IFS, explained, "The options for raising revenue are narrowing, and the government faces tough choices if it wants to avoid further spending cuts or unpopular tax hikes."
Complicating matters is Labour’s steadfast commitment not to raise taxes on what it calls "working people." This pledge rules out increases to the headline rates of income tax, VAT, or national insurance contributions—the three largest sources of tax revenue for the government. As The Times notes, this leaves Reeves with "fewer places to look to raise revenue," increasing the likelihood of more targeted, perhaps less visible, taxation tweaks.
Many economists now expect the Chancellor to focus on changes to property and capital gains taxation, with some also predicting adjustments to pension policy. "With the biggest tax levers off-limits, the government may turn to more technical adjustments," said one analyst quoted by Financial Times. Such moves might not grab headlines but could have significant ramifications for investors, homeowners, and retirees alike.
But it's not just about balancing the books. Reeves has made it clear that her Budget will include measures aimed at easing the cost of living crisis. In a series of interviews during the International Monetary Fund (IMF) summit in Washington, the Chancellor promised "targeted action to deal with cost of living challenges" while also pledging to bring down inflation. As reported by BBC News, Reeves stated, "We do want to bear down on the costs people face, and are looking at a range of policies in the Budget to further that." She emphasized the government's "role in areas of regulated prices," pointing to recent caps on prescription charges and bus fares as examples of intervention.
One concrete plan under consideration is a cut in the VAT on fuel bills, which currently stands at 5%. According to estimates cited by Daily Mail, scrapping this tax could save households an average of £86 a year but would cost the Treasury up to £1.75 billion. Another option being floated is the reduction of green levies on energy bills, which presently add more than £200 a year to the average family's expenses. However, with the government facing what Daily Mail describes as a "£30 billion black hole in public finances," such relief measures could prove too costly to implement without offsetting cuts or new sources of revenue.
The pressure to act is intensified by the stubbornly high rate of inflation. Reeves herself admitted that inflation remains "too high," with prices rising 3.8% in the 12 months to August 2025, driven in large part by soaring food costs. The IMF has projected that UK inflation will be higher than in any other leading economy this year and next, a sobering assessment that underscores the depth of the problem.
Energy prices, in particular, have become a flashpoint. Households saw their average annual energy bills jump to £1,755 in October 2025 after the regulator Ofgem raised the price cap by 2%. The country’s largest energy supplier, Octopus Energy, has warned that electricity prices could rise by a further 20% within four or five years unless the government changes course. This stark warning has added urgency to calls for immediate action in the Budget.
As the Budget approaches, speculation about which taxes could rise has reached fever pitch. While Labour’s red lines on income tax, VAT, and national insurance are clear, the government has left the door open to other changes. According to BBC Newscast, "taxes that could rise in November's budget" are a hot topic of discussion among economists and policymakers alike. Even minor tweaks to capital gains or property taxes could have ripple effects across the housing market and investment landscape.
Yet, the Chancellor’s room for maneuver is limited. The combination of rising borrowing costs and weak growth forecasts has drastically reduced her options. As the IFS points out, the government cannot rely on economic growth alone to fill the fiscal gap. Without new revenue streams or spending cuts, the risk of a return to austerity looms large—a prospect that would be politically perilous for Labour.
All of this is unfolding against a backdrop of broader economic and security concerns. While the Budget is front and center, issues such as the UK’s relationship with China and domestic security threats have also featured in recent high-level discussions, according to BBC News. These challenges, while not directly related to the Budget, add to the sense of uncertainty and complexity facing the government.
As November draws near, the Chancellor’s choices will be scrutinized not just by economists and political opponents, but by millions of households anxious for relief. The question on everyone’s mind: Can Reeves square the circle—delivering help where it’s needed most, without triggering another round of cuts or unpopular tax hikes?
All eyes will be on Westminster as Rachel Reeves prepares to deliver a Budget that could define her tenure—and, perhaps, the trajectory of the UK economy for years to come.