Chancellor Rachel Reeves is expected to implement “significant tax increases” in the upcoming Autumn Budget, according to analysts at Goldman Sachs.
The investment bank cautioned that the UK has had “limited historical success” in repairing public finances through tax hikes. It warned that concerns over the nation’s fiscal outlook are unlikely to ease.
Reeves faces mounting pressure to address a sizeable budget deficit ahead of the 26 November Autumn Budget. Goldman noted that, historically, the UK economy has weathered spending cuts better than tax increases.
However, with major welfare reforms abandoned earlier this year, the scope for deep spending reductions appears politically constrained. Sven Jari Stehn, Goldman’s chief European economist, explained:
“Given the large increase in the number of workers who have dropped out of the UK labour force to receive long-term sick and disability benefits, welfare reform could be expected to boost labour supply as well as lower spending.”
The UK’s strained fiscal position comes against a backdrop of sluggish growth, persistent inflation, and rising borrowing costs—all factors that heighten the stakes for Reeves’ first major Budget.
