The Institute for Fiscal Studies (IFS) has warned that Chancellor Rachel Reeves may have to increase income tax or cut public spending to balance the Budget, suggesting that raising several smaller taxes instead of breaking a manifesto pledge not to increase income tax will cause “unnecessary amounts of economic damage.” IFS senior researcher Isaac Delestre said that while it is “possible to raise tens of billions without breaking the letter of Labour’s manifesto promise” not to increase income tax, VAT or employee National Insurance contributions, “it increases the risk of raising taxes in a way that would cause unnecessary amounts of economic damage, or add needless complexity to the system.” He added: “Of course, she always has the option of reducing spending instead of increasing tax.” With Ms Reeves looking to plug a hole in the public finances, Professor Stephen Millard, deputy director of the National Institute of Economic Research think-tank, said: “Trying to fill the gap without changing any of the main taxes would mean a lot of small changes, making the tax system ever more complicated and less efficient.”

According to a survey by Helm, 84% of UK business leaders are concerned about potential tax increases in the upcoming Budget. This anxiety has led to 75% of them pausing hiring or investment decisions. Helm, representing 400 scale-up founders, highlights that these members contribute £1bn annually in tax.

The Confederation of British Industry (CBI) has warned that businesses cannot withstand further tax increases and voiced concern over prolonged uncertainty. Firms expect a decline in activity over the next three months, with negative sentiment persisting for 13 months. CBI deputy economist Alpesh Paleja said: “Firms are facing a difficult winter, with private sector momentum weak and confidence fragile.” He added: “Uncertainty around the upcoming Budget is weighing heavily on sentiment, with many firms keeping key decisions on hold until more clarity is forthcoming.”

The upcoming changes to business rates will significantly impact office-based firms in London, potentially leading to closures. Starting next April, properties valued over £500,000 will face increased rates. According to Search Acumen, 16,780 properties in London fall into this category, representing over two-thirds of the new top band. Andrew Lloyd, managing director of Search Acumen, warned that higher rates could “choke investment, jobs and growth.” The Heart of London Business Alliance estimates overall business rates could rise by 26%, from £9bn to £11bn. Niki Fuchs, CEO of Office Space in Town, highlighted further potential increases due to changes in property assessments.

UK businesses are leading globally in risk management, with nearly 80% of firms reporting board involvement in risk oversight, according to Aon’s Global Risk Management Survey. Three-quarters of UK firms have dedicated risk departments, surpassing the global average of 68%. It was also shown that UK firms are more likely to rely on brokers to identify major risks, with 78.3% doing so compared with 55.7% globally. The poll saw UK businesses identify cyber-attacks and data breaches as their top risks, followed by business interruption and economic slowdown. Looking ahead, UK firms placed AI and increased competition among their top five emerging risks over the next three years.

Chancellor Rachel Reeves’ proposed 15% National Insurance contributions on limited liability partnerships (LLPs) may significantly impact partners’ retirement plans. The planned reform could impose an additional £46,000 burden per partner. Eliana Sydes, head of financial life strategy at Y TREE, noted that this could lead to an 8% tax increase after deductions, effectively adding 20% to partners’ working lives over five years. Many professionals, it is suggested, may need to restructure their finances or reconsider partnerships due to these changes.

The Financial Conduct Authority (FCA) will no longer require firms short-selling UK-quoted companies to disclose their identities. Instead, only total short positions will be published. This change aligns UK regulations more closely with US practices and raises the threshold for notifying the FCA about short positions from 0.1% to 0.2%. The Bank of England’s Financial Policy Committee said earlier this year that it was looking for ways to simplify regulatory interventions and improve productivity. Chancellor Rachel Reeves has advocated for a pro-growth regulatory approach, aiming to enhance the UK’s status as a global financial centre. However, concerns arise that this could lead to increased short-selling activity, potentially destabilising equity markets. The City watchdog is consulting on the plans, with an aim for the final rules to come into effect in the second half of 2026.

Chancellor Rachel Reeves must address a £20bn shortfall in the upcoming Budget due to a projected downgrade in UK productivity by the Office for Budget Responsibility (OBR). The OBR plans to reduce its productivity growth forecast by 0.3 percentage points, which could increase public sector net borrowing by £21bn by 2029/30, according to the Institute for Fiscal Studies, which has suggested each 0.1-percentage-point downgrade to productivity would increase public sector net borrowing by £7bn. In a speech earlier this week, Ms Reeves suggested a downgrade was on the horizon, saying that the OBR “is likely to downgrade the forecast for productivity in the UK based not on anything this government has done, but on our past productivity numbers.” She also noted that productivity has been “very poor since the financial crisis and Brexit.”

MPs have voiced concern that the National Wealth Fund (NWF) may struggle to drive growth in the UK economy. Members of the Treasury Select Committee, led by Meg Hillier, said they “remain to be convinced” whether the NWF will “meaningfully shift the dial on economic growth.” Unlike traditional sovereign wealth funds, the NWF relies on taxation and borrowing, limiting its capacity for risk. The committee said the limited size “could limit its strategic impact on economic growth” and restricts its capacity to take risk, noting that unsuccessful investments could “more rapidly deplete the overall pool available for investment.”

The Government’s proposed mansion tax could significantly impact homeowners in central and north London. The Chancellor is considering a 1% levy on properties exceeding £2m, potentially costing owners an extra £5,000 annually. Analysis reveals that areas like Knightsbridge and Belgravia have 62% of homes valued over this level. Jeremy Karpel, director at estate agency TK International, warned that the tax unfairly targets older homeowners, saying: “They tend to be asset-rich and cash-poor.” Telegraph analysis shows that many areas with a high concentration of homes valued at £2m and above also have a high proportion of residents over the age of 65.