Rachel Reeves’s Budget was always going to hurt – now it’s even worse | Personal Finance | Finance
In an environment where the economy has difficulty growing and borrowing costs are high, the country urgently needs an interest rate cut. We couldn’t get one today. It’s further bad news for beleaguered Britons as the budget approaches on 26 November.
Rachel Reeves is bracing for her second tax attack in more than a year, and it could be much worse than last year. While its first budget in October 2025 was a horror show, much of the burden has fallen on businesses through a £25bn “business tax”. This destroyed thousands of companies and hundreds of thousands of jobs.
The upcoming Budget will be even tougher because businesses can’t take much more. As a result, Reeves will target ordinary taxpayers directly.
It now looks very likely that he will increase income tax by 2p per pound while attacking our pensions, savings, inheritances and estates.
Today’s rate cut wouldn’t have prevented the attack, but it would have put a little more money in people’s pockets before Reeves snatched it away again. Unfortunately, we couldn’t even get that.
And do you know the real reason? Rachel Reeves constantly makes mistakes. The Chancellor blames everyone else for his problems, but it’s all his fault.
Why didn’t the Bank of England cut interest rates today but kept them at 4%? Because inflation in the UK is much higher than in the rest of Europe.
One of the main reasons for this is the employment tax, as businesses pass the cost on to consumers in the form of higher prices.
The chancellor’s decision immediately after the election to give large pay rises to public sector workers and to increase the minimum wage by 6.7% in April, which reduced inflation, increased inflationary pressures.
All these costs are being reflected, keeping inflation high at 3.8% in September, making it impossible for the Bank of England to cut interest rates today.
Compare this to the eurozone, where inflation fell to 2.1% in October. The European Central Bank cut its main interest rate to 2.15%, almost half of 4%.
A similar cut here would save mortgage holders hundreds of pounds a month and businesses billions of dollars in debt servicing costs, and leave the economy in a much better position.
But we didn’t get that cut, and that’s down to Reeves himself.
For the record, I think keeping interest rates at 4% is a terrible mistake. We desperately need this cut, especially since the BoE has stated that inflation will decrease. Four of the nine members of the BoE’s rate-setting monetary policy committee agreed with me in voting for the rate cut.
It’s clear why others didn’t. The culprit sits in number 11 and is no doubt wondering who he can blame for his latest accident.
We now go into the Budget feeling a little poorer and a little more under pressure, and that’s down to Reeves.
Only three weeks until the budget. He will no doubt try to deny responsibility when the tax attack causes even more damage, but don’t let him get away with it.
Yes, Labor inherited a mess, but everything Reeves has done since hastened our decline.
Today was our last chance to breathe before the Budget and we didn’t get it. So whose fault is this? Take a guess.
