Chancellor of the Exchequer Rachel Reeves is facing mounting pressure from business groups and investors as she navigates the complex terrain of economic reform in the United Kingdom. Just days after her statements at the British Private Equity & Venture Capital Association (BVCA) summit in London on September 10, 2025, Reeves finds herself at the center of a debate over how best to stimulate growth without fanning the flames of inflation.
Business leaders, still reeling from the aftershocks of Reeves’ first budget, have sounded alarms about the possible impact of her upcoming second budget. According to multiple business groups cited by Bloomberg, the Labour government’s proposals on taxes, employment rights, and the minimum wage could add billions of pounds in operating costs for companies. With profit margins already squeezed, many firms say they simply don’t have the ability to absorb these costs without passing them on to consumers—a move that would almost certainly push inflation higher.
“Stubborn inflation has emerged as one of the biggest drawbacks from Chancellor Rachel Reeves’ first budget. She risks repeating the result with her second,” one industry association warned, echoing the concerns of many in the private sector. The warning couldn’t come at a more delicate time. The UK economy remains subdued, and Reeves is under immense pressure to show that her policies can deliver the growth she’s promised without undermining price stability.
At the BVCA summit, Reeves addressed a roomful of private equity bosses with a bold message: she intends to shut down more regulators across the UK as part of her drive to make Britain a more attractive place to do business. “I want to take out more regulators; there’s still too many,” Reeves said, according to The Guardian. She didn’t specify which regulators were in her sights, but her recent actions have already made waves. Reeves sacked Marcus Bokkerink, the chair of the Competition and Markets Authority (CMA), in January 2025. Doug Gurr, former Amazon UK boss, was appointed as interim chair—a move Reeves said led to a “massive step-change” that was welcomed by firms, especially those in the tech sector.
“Previously businesses, all the time – especially in tech – had been raising concerns about the CMA. That has changed a lot,” Reeves told the summit. Her government has also shut down the payments regulator and, in a controversial step, “severely” constrained the Financial Ombudsman Service. The service, which settles disputes between consumers and businesses, had been accused by lenders of delaying and complicating the car finance scandal. “We’re severely constraining the Financial Ombudsman, which I think is very important: they are not a regulator, they’re supposed to be a resolver of complaints but their role has grown much too much,” Reeves explained.
Reeves’ regulatory shake-up is part of a broader campaign to “rip out those things that have been blocking growth and instead, backing the builders,” as she put it. The chancellor has repeatedly described regulators as a “boot on the neck” of business, a phrase she first used in July 2025. Her approach has found some support among investment firms, who have long complained that overzealous regulation stifles innovation and discourages investment. However, critics worry that slashing oversight could open the door to abuses and undermine consumer protections.
Environmental regulations have also come under scrutiny. Reeves pointed to changes at the Department for Environment, Food and Rural Affairs (Defra), which is now led by former City minister Emma Reynolds following a cabinet reshuffle in early September. According to The Guardian, the department is shifting its focus to “facilitate growth rather than find reasons to say no to development, whether that is through Natural England, or the Environment Agency.” Reeves told the BVCA summit that Defra is “moving in the right direction,” signaling a more business-friendly approach to environmental policy.
But even as Reeves courts the business community, the specter of inflation looms large. Business groups warn that the combined effect of higher taxes, expanded employment rights, and a rising minimum wage could prove disastrous for companies already operating on razor-thin margins. “Because firms currently have smaller profit margins, they have less capacity to absorb these costs without passing them on to consumers,” one industry representative noted. The result, many fear, could be another surge in prices at a time when households are already feeling the pinch.
The government is also grappling with a projected shortfall of up to £40 billion in the public finances. Rumors are swirling about potential tax increases targeting banks, property, and landlords’ rental income—measures that could further complicate the economic outlook. Reeves is expected to unveil her autumn budget on November 26, 2025, and the stakes couldn’t be higher. The chancellor has promised to make it easier to do business in Britain, but she must also find a way to balance the books without derailing the fragile recovery.
One area where Reeves has sought to reassure the markets is in her support for the Financial Conduct Authority (FCA). She recently reappointed chief executive Nikhil Rathi for a second five-year term, citing his positive response to her call for regulators to “drive growth.” “When I wrote to regulators and asked: ‘What can you do to drive growth?’ … Nikhil responded positively to that. And that’s why we reappointed him to carry on heading up FCA,” Reeves said at the summit.
The chancellor’s sweeping reforms have drawn mixed reactions from across the political spectrum. Supporters argue that cutting red tape and streamlining regulation are essential for making the UK more competitive in a post-Brexit world. Detractors, however, caution that weakening oversight could lead to unintended consequences, including financial instability and environmental harm. Labour’s own base is divided, with some urging Reeves to prioritize social protections and others calling for a more aggressive pro-business agenda.
For now, Reeves appears determined to press ahead. “The regulatory reforms are very welcomed, and I think, needed for business,” she insisted. Yet she also acknowledged that “there’s still more to do,” hinting at further changes to come. As the autumn budget approaches, all eyes will be on the chancellor to see whether she can deliver on her promise of growth without triggering another round of inflation.
In the end, the question remains: can Reeves walk the tightrope between supporting business and protecting consumers, all while keeping inflation in check? The coming months will provide the answer, as Britain’s economic future hangs in the balance.
