Rachel Reeves has been urged to rule out further business tax hikes in the upcoming Budget, despite needing to tackle a black hole of up to £30bn in the public finances. This comes with data from the Confederation of British Industry (CBI) showing that business activity fell at the fastest pace since the pandemic in the three months to September. CBI deputy chief economist Alpesh Paleja said there was “renewed nervousness” about the Budget, “with businesses concerned about being asked to again shoulder the burden of fixing the public finances.” Noting that the business tax burden is already at a 25-year high, he said the Chancellor “must quickly reaffirm last year’s commitment to no more business tax rises.” The CBI’s growth reading – which subtracts the proportion of firms where output is falling from those where it is rising – came in at -32%, marking the lowest level since August 2020. Meanwhile, expectations for the three months ahead hit the lowest level since May.

The Resolution Foundation has advised the Government to reconsider its commitment to not increasing income tax in the upcoming Budget, suggesting that the Chancellor should consider the measure as the Treasury looks to address a £30bn fiscal deficit. The think-tank says such a move could be balanced by a 2% cut to National Insurance, with these changes potentially generating £6bn for the Treasury. The foundation has also suggested that extending the freeze on income tax band thresholds until 2028 or 2029 would be “sensible” and could pull in an additional £7.5bn. Meanwhile, Rain Newton Smith, head of the Confederation of British Industry, has warned Rachel Reeves against “slavish adherence” to tax commitments made in Labour’s manifesto.

Highlighting that UK tax legislation, which stretches to 23,522 pages and 1,180 reliefs, is the longest and most intricate in the world, the Sunday Times looks at calls for reform. Experts, including Helen Miller from the Institute for Fiscal Studies, argue for a radical overhaul of the system to improve economic activity. While Adam Corlett from the Resolution Foundation think-tank suggests a 2 percentage point cut to employee National Insurance and a 2 point increase to the rate of income tax, other analysts have suggested merging the two levies.

The Federation of Small Businesses (FSB) has warned that start-ups and sole traders will be hit by changes that will remove tax relief on business rates. Small business rate relief (SBRR) reduces firms’ annual business rates bill, with discounts of 100% on some properties. However, the Valuation Office Agency has started to disqualify firms in shared office spaces from receiving a discounted rate. The FSB, which says up to 150,000 small businesses and sole traders will be affected, has called on the Government to ensure relief remains in place. Describing SBRR as a “lifeline” for many small firms, FSB policy chair Tina McKenzie said: “This creeping change is really limiting growth among small businesses.” She added: “We want to work with Government to create a fair business rates framework.”

With the Budget approaching, economists predict that the Chancellor could deliver tax hikes of around £30bn. Former Chancellor Jeremy Hunt argues that these increases are not inevitable but a political choice. He emphasises that higher taxes hinder economic growth and investment and suggests that improving public sector efficiency and reforming welfare could mitigate the need for tax hikes. Mr Hunt says that “evidence from all over the world” shows that lower tax means higher growth, adding a warning that higher levels of tax reduce investment by businesses. Mr Hunt argues that without decisive action, the UK “will remain stuck in a double spiral of ever-higher tax and ever-higher debt leading to ever-lower growth.”

The Prime Minister has announced that a digital ID will be mandatory in order to work in the UK as part of the Government’s efforts to tackle illegal migration. Sir Keir Starmer said the scheme will “make it tougher to work illegally in this country, making our borders more secure.” He added that it will also “offer ordinary citizens countless benefits, like being able to prove your identity to access key services swiftly.” Conservative leader Kemi Badenoch said the proposals would not stop people crossing the Channel in small boats, while also voicing concern about the security of the data. Liberal Democrat leader Sir Ed Davey argued that the scheme would “add to our tax bills and bureaucracy, whilst doing next to nothing to tackle channel crossings.”

Figures from jobs website Indeed show that while the overall number of vacancies posted on the platform has recovered to pre-pandemic levels across Europe and North America, listings in the UK are down by 23% and graduate listings have seen a 33% year-on-year decline. Jack Kennedy, senior economist at Indeed, said: “It’s the first time that we’ve seen graduate hiring weakening to a greater extent than the overall market during sort of periods of economic uncertainty.”

Liam Halligan in the Sunday Telegraph highlights that UK productivity has stagnated since the 2008 financial crisis, with the Office for Budget Responsibility reporting annual growth of just 0.1%. This decline, he notes, has severely impacted wages, consumer spending, and tax revenues. Mr Halligan cites a report by EY which shows that while private sector productivity is up only 3% since 2019, output per hour across the public sector has fallen 5%, “dragging down the broader economy.” Asking why there are now 516,455 civil servants on the public payroll, 34% more than in 2017, Mr Halligan says: “To crack the UK’s productivity puzzle, we need to start with the state.”

The Financial Conduct Authority says it is “concerned” over high-risk investment schemes offered by unregulated firms. The City watchdog noted that those selling high risk, unregulated investments “typically draw people in with enticing websites, marketing campaigns and social media finfluencer promotions.” The FCA said that while higher investment risks “can be right for some people,” they should be “wary of putting all your eggs in one basket.” Urging consumers to “spread your investments across different products and areas,” it said that diversifying investments “can smooth out the effects of one performing badly.”

Chancellor Rachel Reeves is considering scrapping the annual spring forecast from the Office for Budget Responsibility (OBR). Sources say the move would streamline fiscal events and enhance Treasury stability. However, OBR chief Richard Hughes opposes such a change, having told the House of Commons’ Treasury Select Committee that moving to a single annual forecast would “make us one of the least fiscally transparent countries in Europe and of any major advanced economy.” Meanwhile, Ben Zaranko from the Institute for Fiscal Studies has warned that sidelining the OBR could increase fiscal constraints and raise borrowing costs. The International Monetary Fund has previously recommended reforms to the OBR’s twice-yearly assessments, citing potential risks to fiscal sustainability. Ms Reeves, who has acknowledged the importance of independent economic institutions in maintaining “checks and balances” on governments, noted in July that officials were “looking at how the OBR works.”

Swati Dhingra, a Bank of England policymaker, says fellow members of the Monetary Policy Committee, should avoid being “overly cautious” about cutting interest rates. She said: “The effects of the shocks driving the UK’s current high inflation relative to Europe will fade,” adding that while the Organisation for Economic Co-operation and Development predicts that the UK will have the highest inflation rate in the G7 across 2025, this is driven by short-term factors. Ms Dhingra said officials “can afford to cut rates further and not put additional strain on economic growth without threatening the inflation target.”

Chancellor Rachel Reeves is facing calls from within Labour to open the door for more public spending, with one minister telling the Sunday Telegraph: “Everybody is begging for the fiscal rules to be slackened so we have a bit more we can do in our portfolios, and lots of ministers have made that case to the Treasury.” Warning that the Government cannot rely on “austerity-lite,” the minister said there are “just too many gaps that need to be filled.” Another Government source said meetings between the Treasury and Whitehall departments have seen ministers make the case for borrowing limits to be relaxed.

PwC has upgraded its UK growth forecast for 2025 from 1.1% to 1.3%, citing stronger-than-expected performance in the first half of the year. The firm added that GDP is forecast to rise 1.2% in 2026, with this potentially hitting 1.6% if households shift from saving to spending. Growth, it said, has been supported by Government spending, while consumer spending has held up better than expected but remains broadly flat. Barret Kupelian, PwC UK’s chief economist, said: “Growth is subdued but not stalling.”

Barney Hussey-Yeo, founder of AI fintech Cleo, has suggested that the London Stock Exchange (LSE) should merge with New York’s Nasdaq. Warning that the LSE is “completely broken” following a series of delistings, he said a merger was “doable” and while there would be “lots of things to do,” it is “the political will and actually getting stuff done which is the issue.” Warning that the UK “is only ever going to have finite capital,” Mr Hussey-Yeo proposed a “pan UK-American stock exchange.” This, he said, would “dramatically change the depth of capital and listing prospects” of UK and US companies.

Research from Nottingham Building Society has revealed the financial decisions older people most regret. A significant 33% of over 60s wish they had started saving earlier, with this rising to 41% among those in their 80s. Additionally, 35% of those 60 and over regret not contributing more to their pensions. A quarter (26%) said overspending on non-essentials is their biggest financial regret, while 18% wish they had budgeted better. Harriet Guevara, the society’s chief savings officer, said: “For younger savers, this research is a reminder that habits formed now will pay off in the future.”