Britain’s chancellor of the Exchequer, Rachel Reeves, on Wednesday announced more than £26 billion ($34 billion) in tax increases by 2030, aiming to reinforce the UK’s strained public finances amid sluggish growth and rising welfare costs.
Presenting her second annual budget, Reeves said most of the new revenue would come from changes to personal income tax. The move follows last year’s budget, in which she implemented roughly £40 billion in tax hikes — a scale she said she had hoped not to repeat.
Reeves said the latest increases were driven by weaker growth forecasts, higher demands on the welfare system and her commitment to reducing national debt. Still, economic projections were not as bleak as expected, allowing her to avoid some of the harsher measures analysts had predicted.
Overall, the budget shifts more of the financial burden onto higher earners, while easing pressure on low-income families and younger people. “These are my choices,” Reeves said. “Not austerity. Not reckless borrowing. Not ignoring unfairness. My choice is a budget for fair taxes, strong public services and a stable economy.”
The budget marks a pivotal moment for the Labour government. Despite a sweeping election victory, both Reeves and Prime Minister Keir Starmer have seen approval ratings fall to record lows during their 16 months in office. Confronted with slow growth, high debt, elevated interest rates and global instability, Reeves has struggled to win over sceptical voters, factions within Labour and nervous bond markets.
Since taking office, Reeves has vowed to place public finances on “firmer footing,” while boosting funding for public services and long-term investment. But her ambitions are restricted by her own “ironclad” pledge to cut debt and avoid raising certain taxes on working households.
Michael Saunders, an economist at Oxford Economics, said the budget technically met its fiscal goals but lacked measures to support long-term growth or expand public spending. This, he said, “reinforces the impression that the government is unwilling to take difficult decisions.”
Opposition Conservative leader Kemi Badenoch criticised the package, accusing Reeves of breaking earlier tax promises and calling the budget a “total humiliation.”
