Autumn Budget 2025: A summary

The Chancellor of the Exchequer, Rachel Reeves, presented her 2025 Autumn Budget to Parliament on 26 November and published supporting documents on the gov.uk website.

When the Chancellor finished her statement in the Commons, the Office for Budget Responsibility (OBR) published updated forecasts for the UK’s economic and fiscal outlook. The OBR is the independent public finances watchdog that produces the official forecasts for the economy and public finances used by the Chancellor.

The Chancellor said that the 2025 Autumn Budget is “a Budget for fair taxes, strong public services, and a stable economy.” She said that “[in] the face of challenges on our productivity, I will grow our economy through stability, investment and reform. I’ve met my fiscal rules and built our economic resilience for the future.”

Selected announcements Personal tax thresholds

The government has announced it will extend the freeze to personal tax thresholds (income tax and National Insurance contributions) for three further years, from April 2028 to 2031. The OBR expects this will raise £23 billion in total by 2030/31.

National Insurance contributions and pension salary sacrifice schemes

The government announced that from April 2029 only the first £2,000 of pension contributions made by each employee through a salary sacrifice scheme will be exempt from National Insurance contributions (NICs). Currently no cap exists. Employer and employee NICs will be due for pension contributions made through salary sacrifice schemes exceeding that cap. The OBR estimates this will raise £4.7 billion in 2029/30, and £2.6 billion in 2030/31.

High Value Council Tax surcharge

The government will introduce a High Value Council Tax Charge from April 2028. It will apply at a flat rate of £2,500 per year on properties valued between £2 million and £2.5 million, rising to £7,500 a year for properties valued at over £5 million in value. The OBR forecasts this will raise £0.4 billion a year from 2028/29.

Motoring taxes

The government has extended the temporary 5p cut in the rates of fuel duty to September 2026 and cancelled the inflation-linked rise in fuel duty rates. This means fuel duty rates have not been uprated for 16 years. The government has committed to a staggered reversal of the 5p cut between September and December 2026, and to increase fuel duty rates by Retail Price Index inflation from April 2027.

Other announcements

The two-child limit on Universal Credit will be removed from April 2026. This change is expected to reduce the number of children in poverty by 450,000 by 2029/30, compared with what it otherwise would have been. The cost is forecast to be £2.4 billion in 2026/27 and then rise, reaching £3.2 billion in 2030/31.

Changes to the Renewables Obligation and the Energy Company Obligation will reduce household energy bills by around £150 on average in Great Britain from April 2026.

Public spending

The Chancellor made several changes to public spending at this Budget – in total, public spending will now be about £32 billion a year higher in 2029/30 than had previously been forecast. This is largely the result of much higher welfare spending, which is itself mostly driven by the reversal of previous reforms to disability benefits, and the removal of the two-child benefit cap.

The Chancellor has largely left departmental spending allocations up to 2028/29 unchanged, and has pencilled in reductions to spending in the years after that. However, the OBR has identified pressures on public spending that may make these reductions difficult to implement.

The OBR’s public finances forecast Government borrowing

The Office for Budget Responsibility (OBR) forecasts that government borrowing will decrease from £150 billion in 2024/25 to £138 billion in 2025/26. Borrowing is then forecast to fall to £67 billion in the final year of the OBR’s current forecast period.

More borrowing in most years, compared with the March 2025 forecast

The OBR forecasts that borrowing from 2025/26 to 2028/29 will be around
£16 billion higher, on average, a year compared with its March 2025 forecast. Much of the additional borrowing is because the OBR expect underlying borrowing to be higher. The Chancellor’s decisions contribute around
£5 billion a year to the increase.

Borrowing in 2029/30 is forecast to be around £6 billion lower, compared with the March 2025 forecast. The Chancellor’s tax decisions raise sufficient revenues to more than cover an increase in the OBR’s underlying borrowing forecast and the Chancellor’s spending decisions.

Government debt

Government debt was equivalent to 93.6% of GDP at the end of 2024/25. The OBR forecasts that it will increase to 97.0% at the end of 2028/29. It will then fall to around 96.1% of GDP at the end of 2030/31.

The fiscal rules

The government has targets for its day-to-day budget and its net financial debt in 2029/30, widely known as the Chancellor’s ‘fiscal rules’.

The OBR assessed that both rules were being met in its forecast.

Day-to-day budget rule

The first rule says that the current budget must be in surplus in 2029/30.

The government is forecast to meet this target by a margin of 0.6% of GDP (£22 billion) in 2029/30, compared with a margin of 0.3% of GDP in the March 2025 forecast.

The OBR says the probability of this target being met is 59%.

Source: OBR, Economic and fiscal outlook – November 2025, Chart 7.1

Net financial debt rule

The second fiscal rule says that public sector net financial liabilities (PSNFL), expressed as a percentage of GDP, should be falling in 2029/30, compared with the previous year.

The government is forecast to meet this target by a margin of 0.7% of GDP (£24 billion) in 2029/30.

The OBR says the probability of this target being met is 52%.

Moving to a single assessment of the rules per year

Currently, the OBR is required to produce two forecasts a year and assess the fiscal rules at both.

The Chancellor proposes to legislate so that in the future the fiscal rules are only assessed once a year, in the OBR’s forecasts for the Budget. The OBR would continue to publish two forecasts a year but would only formally assess the fiscal rules once a year.

The OBR’s economy forecast

The OBR is forecasting GDP growth of 1.4% or 1.5% for every year from 2025 to 2030.

Following better than expected growth at the end of 2024 and early 2025, the OBR raised its forecast for GDP growth for 2025. However, the OBR lowered its forecast for GDP growth for subsequent years, by an average of 0.3 percentage points for 2026 to 2029.

This downward revision was largely a result of the OBR lowering its forecast for the underlying rate of productivity growth, a key driver of sustainable economic growth, from 1.3% to 1.0% per year. This decision was in response to weak productivity growth since the financial crisis of 2007 to 2009 and moves the OBR more in line with other forecasters.

The OBR raised its expectations for inflation in 2025 and 2026, to 3.5% and 2.5%, respectively, reflecting higher food and services price inflation since its previous forecast. This was despite the OBR estimating that Budget policies, such as measures to lower energy bills and extend the freeze on fuel duty, will reduce inflation by 0.3 percentage points in 2026 (compared with not having these measures).

The OBR lowered its forecasts for how much a prominent measure of after-tax household incomes will rise in the coming years. On a per person basis, adjusted for inflation, this measure of living standards is expected to be less than 2% higher in early 2031 than it was at the end of 2019, before the covid-19 pandemic.

Source: OBR, Economic and fiscal outlook – November 2025, 26 November 2025, Table A1; OBR, Economic and fiscal outlook – March 2025, 26 March 2025, Table A1; quarterly forecasts from Table 1.5 of ‘detailed forecast tables: economy’

What happens next? (updated 4 December 2025)

Immediately after the Budget statement, the House of Commons approved a motion so that changes to stamp duty reserve tax and tobacco duties could take effect on 26 November.

The Budget debate began in the House of Commons with a speech from the Leader of the Opposition. On 2 December 2025, the House agreed to all of the resolutions laid by the Chancellor and were incorporated in the Finance (No. 2) Bill 2024-26. The House divided on seven resolutions, and the other 94 were agreed to unopposed.

The Library has published the briefing Budget 2025 and Finance (No. 2) Bill 2024-26, which will be updated regularly as the bill progresses. The bill’s second reading is scheduled to take place on 16 December 2025.

The Library briefing The Budget and the annual Finance Bill examines the way that Parliament scrutinises the Government’s proposals for taxation.

Find all of the Library’s research on the 2025 Autumn Budget in one place.