Reeves told Labour MPs the Budget was “a package, not a pick-and-mix. You can’t say you like the cola bottles but you don’t like the fruit salad”.
Rachel Reeves will finally announce the UK Government’s spending plans for the year ahead after weeks of speculation.
The Chancellor will deliver her second Budget since Labour’s landslide general election win in 2024 with her party trailing Reform in the polls and deep unhappiness with Keir Starmer’s time in Downing Street so far.
Reeves today pledged there would be “no return to austerity”.
“I will not return Britain back to austerity, nor will I lose control of public spending with reckless borrowing,” the Chancellor said.
“I will take action to help families with the cost of living…cut hospital waiting lists…cut the national debt. And I will push ahead with the biggest drive for growth in a generation.
“Investment in roads, rail and energy. Investment in housing, security and defence. Investment in education, skills and training. So together, we can build a fairer, stronger, and more secure Britain.”
Reeves, who will begin making her statement around 12.30pm, previously told Labour MPs they would like 90-95% of her spending plan but warned they would have to accept the tougher measures. She added: “It’s a package, not a pick-and-mix. You can’t say you like the cola bottles but you don’t like the fruit salad.”
READ MORE: Irn-Bru hit by UK sugar tax as tough new rules on soft drinks announcedREAD MORE: Scottish Labour MP goes viral after using biscuits to explain the UK’s national debt
Reeves has previously announce the National Minimum Wage and the state pension will both rise.
The Chancellor is also expected to abolish the hated two-child cap on benefits after years of campaigning on the issue by anti-poverty charities.
It’s likely the Labour minister will freeze income tax thresholds – known as fiscal drag – in a bid to close a multi-billion pound black hole. Thresholds are devolved to Holyrood, but the £12,570 tax-free personal allowance is reserved and a freeze would affect Scots.
Reeves is said to be facing a more difficult economic outlook in the medium term after the Office for Budget Responsibility downgraded its growth forecast for 2026 and every other year before the next election due in 2029.
The downgrade, and the subsequent reduction in tax revenues, will force the Chancellor to hike taxes to balance the books and build a bigger buffer against future shocks than the historically-low level of headroom she has previously given herself.
As she is preparing to undertake what has been described as a “smorgasbord” approach to raising tax, Ms Reeves could hit high-value properties with a new levy that applies to those worth more than £2 million and could raise £400-£450 million, according to reports.
But she has already been warned about the impact of the so-called “mansion tax” if it is implemented incorrectly.
cottish Labour leader Anas Sarwar called the Budget “a moment to restore confidence and put this Labour government back on track”.
He said: “Ultimately both voters and businesses will have benefitted from decisions this UK Labour government has made.
“The tragedy is the failure to project confidence and communicate those changes have left them feeling uncertain. But if we do not act to increase business confidence, then we will be stuck in the doom loop of speculation, timidity and short-termism that holds our economy back.”
To sign up to the Daily Record Politics newsletter, click here
