KEY TAKEAWAYS FROM THE BUDGET

01.12.2025 Rachel Reeves announced tax rises totaling £ 26bn in last week’s budget. Below we look at the outlook for income investments and the UK economy.

In last week’s budget Rachel Reeves announced £26 bn of tax rises. Markets were cheered by the fact that the estimated headroom against the pledge to balance day-to-day spending with tax receipts by 2029-30 had risen to £22 bn from £10 bn previously.

The main weakness of the budget is that a lot of the tax rises are deferred until the end of the current Parliament. As such their proximity to the next election may make them harder to implement when the time comes.

Markets would have preferred rises in basic and higher rate taxes as they would have been immediate and would also have demonstrated a firm commitment to balancing the books. As it is investors are likely to continue to worry about the UK’s deficit and debt trajectory. So, interest rates on longer dated maturity UK bonds are likely to remain the highest in the G7. Dividend yields on property and infrastructure shares are also likely to remain high.

The other disappointing aspect of the budget was the paucity of measures to boost growth. Following last year’s increase in company National Insurance Contributions business confidence in the UK is very weak. The budget did nothing to improve this state of affairs. Modest growth forecasts of about 1.5% per annum for the next few years seem about right.

For information only. Investors should seek professional advice for their own circumstances before making an investment.

Categorised in: Uncategorised

This post was written by Robin