Chancellor must avoid 'doing bare minimum' in Budget

20 Oct 2025

The Institute for Fiscal Studies (IFS) has warned Chancellor Rachel Reeves that she must 'avoid doing the bare minimum' in the upcoming Autumn Budget on 26 November in order to dodge a 'fiscal Groundhog Day' next year.

The IFS anticipates a £22 billion downgrade to the borrowing outlook for 2029/30. It stated that a 'sizeable fiscal consolidation will be required' for the Chancellor to meet her own fiscal rules.

Ms Reeves should take steps towards a 'simpler, more rational tax system that does less to impinge on economic growth'. Analysis conducted by Barclays suggested that, if tax rises are considered to be inflationary, they could cause interest rates to remain higher for longer.

Helen Miller, Director of the IFS, said: 'For Rachel Reeves, the Budget will feel like Groundhog Day. This is, to a large extent, a situation of her own making. When choosing to operate her fiscal rules with such teeny tiny headroom, Ms Reeves would have known that run-of-the-mill forecast changes could easily blow her off course.

'A key challenge is ensuring that fiscal Groundhog Day doesn't become a twice-yearly ritual. There is a strong case for the Chancellor to build more headroom against her fiscal rules. That wouldn't be costless – but nor is limping from one forecast to the next under constant speculation that policy will be tightened again.'