On 26 November 2025, the UK Government unveiled its latest Autumn Budget 2025, presented by Chancellor Rachel Reeves. This budget comes at a time of economic uncertainty marked by slow productivity growth and high public borrowing, and aims to balance raising revenue with supporting households, businesses, and the public sector.

Key Themes of the 2025 Budget

🧾Raising Revenue through Tax Policies

A central focus of the 2025 Budget is increasing tax revenues to support public services and reduce deficits. Some highlights include:

• A freeze on personal tax and National Insurance thresholds until 2031, which effectively raises tax receipts as wages grow with inflation.
• Introducing tighter limits on salary-sacrifice pension contributions, meaning only the first £2,000 will be exempt from National Insurance from 2029.
• A High-Value Council Tax Surcharge on expensive properties (from £2 million up).

These measures are projected to raise billions of pounds and help fund public spending without increasing headline tax rates.

📉Tackling Poverty and Welfare Costs

One of the most discussed changes is the removal of the two-child limit on Universal Credit and related benefits from April 2026. This change is expected to reduce child poverty by hundreds of thousands of children by the end of the decade.

The policy has sparked debate: supporters argue it will support vulnerable families, while critics raise concerns about long-term welfare costs. Independent analysts project this change will increase welfare spending significantly in the coming years.

⚖️Public Services and Spending

The budget forecasts that public spending will rise by around £32 billion a year by the end of the forecast window. Much of this increase is driven by welfare reforms and previously announced spending commitments, rather than large new departmental budgets.

The Office for Budget Responsibility (OBR) expects that government borrowing will gradually fall over the next few years as revenues increase.

3. What It Means for People & Businesses

👨‍👩‍👧 Households

• Families with children stand to benefit from increased welfare support.
• Freeze on tax thresholds means many taxpayers will pay more tax over time as wages rise with inflation.

🏢 Businesses

• Pension tax changes and new local property charges may increase costs for employers and high-value property owners.
• Other business-related measures, like rising dividend tax rates and changes to inheritance tax bands, aim to generate further revenue.

Reactions and Wider Context

Economists and think-tanks have varied views on the Budget:

• Some praise the efforts to reduce poverty and stabilize public finances.
• Others warn that revenue-boosting measures like tax threshold freezes act as “stealth taxes” that increase tax burdens over time.

Financial markets also reacted to the Budget, with changes in borrowing expectations and bond yields reflecting investor sentiment on fiscal policy.

Conclusion: A Budget Focused on Stability

Overall, the UK Autumn Budget 2025 seeks to:

✅ Raise additional revenue without sharp headline tax hikes
✅ Support vulnerable households through welfare reforms
✅ Balance long-term fiscal responsibility with short-term pressures

While it has been met with mixed reactions, it sets a clear direction for the UK’s fiscal policy as the government navigates economic challenges and social priorities in the years ahead.

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Source:

1. UK Government Budget Speech 2025 — Chancellor’s speech and details
   👉 https://www.gov.uk/government/speeches/budget-2025-speech GOV.UK
2. Budget 2025 — Lords Library Summary — Key announcements & forecasts
   👉 https://lordslibrary.parliament.uk/budget-2025-summary-of-key-announcements-and-economic-and-fiscal-forecasts/ House of Lords Library
3. Office for Budget Responsibility (OBR) Economic & Fiscal Outlook — Official forecast report
   👉 https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/ Office for Budget Responsibility
4. Commons Library: Autumn Budget 2025 Analysis Briefing — Detailed briefing on tax & spending
   👉 https://commonslibrary.parliament.uk/research-briefings/cbp-10405/ House of Commons Library