Budget 2025 Is Set to Shake Things Up
Let me walk you through what’s happening around the upcoming 2025 Budget, because this one is shaping up to be huge. And honestly, the stakes couldn’t be higher for the government, especially for Prime Minister Keir Starmer and Chancellor Rachel Reeves. This isn’t just another financial statement; it’s become a political survival test.
Right now, Wednesday’s budget is being described as “big” in pretty much every sense. It’s expected to bring significant tax rises, bold decisions on public spending, and a long-term direction for the NHS, welfare, and the wider economy. And behind all of that is the reality that Starmer’s government is under serious pressure — from the public, from his own MPs, and from the markets.
The chancellor is walking a tightrope. She needs to show she’s cutting NHS waiting lists, bringing down national debt, and easing the cost of living. At the same time, she’s committing not to raise additional government borrowing or return to austerity-style cuts. That leaves her with one main lever: taxes. And this is where things get politically sensitive. After raising £40 billion in taxes last year — and insisting she wouldn’t come back for more — Reeves is now looking to raise more than £30 billion again.
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Some of that pressure isn’t of her own making. Productivity forecasts were downgraded by the OBR, instantly blowing a £20 billion hole in the public finances. Global tensions, including Trump-era tariffs affecting the world economy, added more strain. But other gaps came from government U-turns, like reversing decisions on winter fuel allowance and welfare cuts — costing about £7 billion.
The shocker is the freeze on income tax thresholds until 2030. Reeves publicly ruled this out in the 2024 Budget, saying it would “hurt working people.” Yet here it is, reintroduced as the biggest revenue raiser. It’s a moment that will undoubtedly come back to haunt her.
Another headline-grabber will be the lifting of the two-child benefit cap. It’s popular within the Labour Party, but polling suggests the public isn’t on board. And spending £3 billion a year on it gives critics more ammunition to paint Labour as “tax more, spend more.”
There’s also talk of a potential mansion tax, tourism tax, gambling tax — even a milkshake tax. Ministers are reportedly nervous that one small measure might explode into the next “pasty tax” moment and spiral out of control.
So as Wednesday approaches, the big question is simple: will this budget steady Labour’s ship, or push it deeper into the storm? Only the reaction afterward will tell.
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