UK Finance Minister Rachel Reeves on November budget
Chancellor of the Exchequer Rachel Reeves speaks on stage during the Labor Party conference in Liverpool, England, on September 29, 2025.
Ian Forsyth | Getty Images
UK Chancellor of the Exchequer Rachel Reeves reiterated the government’s commitment to self-imposed fiscal rules but said it needed to be honest with the public about the challenges the country faces.
Speaking to CNBC’s Karen Tso during the IMF Annual Meeting in Washington, D.C. on Friday, Reeves cited the Russia-Ukraine conflict, tensions in the Middle East and the impact of global trade barriers as key challenges.
“What is important for me is that as Chancellor I am determined to be honest with people about the challenges we face,” he said. “I will respond to those in the budget.”
Reeves will deliver his second Autumn Budget since becoming Chancellor of the Exchequer on 26 November. The policies announced in the upcoming budget come as the UK grapples with a faltering economy, inflated prices and rising government borrowing costs.
Reeves said he would not benefit from individual measures in the budget, such as the possibility of a bank tax, but he wanted Britain to be competitive for businesses to “start up, grow and expand”.
“We want Britain to be seen globally as the place to trade, invest, do business and bring in global talent,” Reeves said.
He added that Britain’s financial regulators must take growth into account, not just risk.
Reeves has been under constant pressure since last year’s Autumn Budget, when the government announced strict rules limiting spending and borrowing room for manoeuvre. Under his fiscal rules, day-to-day government spending must be financed by tax revenues, not borrowing, and Reeves has also pledged to ensure public debt falls as a share of economic output by 2029-30.
But earlier this week he hinted he might have to break the deal to meet those conditions. previous manifesto commitment Not increasing taxes on working people. His other options include breaking his own fiscal rules or finding more ways to cut government spending.
Neither of these options will be popular with voters.
Markets are on edge
Breaking self-imposed financial rules could spook financial markets. When questions arose earlier this year about Reeves’ future in government, Bond markets reacted sharply, indicating investors want him to stay in office and stick to the rules.
with England 30-year government bond yields Trading above 5 percent, the country’s government has the highest long-term borrowing costs among the G-7 countries.
Reeves declined to comment on bond movements but added that markets can see that the government remains abiding by fiscal rules and will continue on the path of fiscal consolidation.
“We know that deficits have been very high over the last few years and as chancellor I am determined to reduce borrowing costs, reduce debt and ensure that we have a growing economy based on a platform of fiscal responsibility,” he added.
Earlier efforts to cut the country’s welfare bill were stalled by MPs in Reeves’ own party refusing to back his plans, leading to the concessions effectively wiping out £5 billion ($6.7 billion) in savings.
Last year’s tax raid on businesses also faced blowback, with many firms saying they were reluctant to hire staff as a result.
— CNBC’s Holly Ellyatt contributed to this report.
