Rachel Reeves cites Brexit impact while ‘looking at tax and spending’ for budget | Budget 2025

Rachel Reeves has said tax rises and spending cuts are on the table for this autumn’s budget as the government aims to plug a widening gap in public finances that she says is partly caused by the ongoing impact of Brexit.

“Of course we are looking at taxes and spending,” the chancellor told Sky News as he prepared for his November 26 announcement. “But as chancellor the numbers will always go up because we saw what happened just three years ago when the Conservatives lost control of the public finances and inflation and interest rates skyrocketed.”

When asked whether Brexit was to blame, Reeves stated that “the ongoing impact of austerity, Brexit and Liz Truss’s mini-budget” had an impact on budget calculations.

“There is no doubt that the impact of Brexit is severe and long-lasting,” he said. “People thought the UK economy would shrink by 4% due to Brexit.”

Reeves said ministers were gradually “undoing some of that damage”, with the government prioritizing recent EU regulations on food, farming, youth mobility and energy trade, and deeper trade links “crucially with the EU”.

He said he wanted to be “the chancellor who gets Britain built” as he vowed to push ahead with plans to speed up major infrastructure projects and overhaul Britain’s sluggish planning system.

The autumn budget will be Labor’s toughest financial test after a fall in productivity forecasts from budget watchdog the Office for Budget Responsibility.

Reeves confirmed the OBR had “consistently overestimated” the UK’s productivity; It is thought that the downgrade expected in previous assumptions will make this task even more difficult.

With no boom in economic growth, stubbornly high inflation and the rising cost of government debt, Reeves will have to fill a black hole that some economists estimate at around £50bn. This includes £6bn following the government’s decision to U-turn on winter fuel payments to pensioners and reduce cuts to the benefits budget.

The chancellor said his approach would be divided between fiscal discipline to ensure “the numbers add up” and a planning drive to push long-stalled projects over the line.

Asked repeatedly about the possibility of immediate tax increases, Reeves refused to rule them out or promise that the fiscal tightening cycle would end this year. He described a “doomsday cycle” in which weak growth limits fiscal slack and leads to further tax increases as something “no one wants to end as much as I do.”

Instead, he insisted that sustainable economic growth was the only permanent solution because it was “what brought in the tax revenues so we could keep taxes low and invest in our public services.”

The Chancellor also highlighted recent figures claiming the UK was the fastest growing economy in the G7 in the first half of the year and business investment was rising. But he acknowledged cost-of-living pressures “remain very real.”

Reeves used this interview to harden Labour’s builder-obstructionist stance; He confirmed his support for the Lower Thames Gateway, connecting Kent and Essex in east London, and promised to cut judicial review times by six months by appointing specialist judges to handle complex cases.

He said the planning and infrastructure bill, which he called “probably the biggest piece of legislation this government has passed in the whole of this parliament”, was in its final stages. He said the bill would “swing the pendulum a little or a lot in favor of those who want to get things done in Britain”.

“ [Lower Thames Crossing] The planning application consists of 350,000 pages. This is longer than all of Shakespeare’s works. Building a road along the Thames is unacceptable. “We could do things faster in the past.”