Autumn Budget 2025: Reaction

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.”

MPs gave their immediate reaction in the debate that followed the Chancellor’s statement to the House of Commons. This continued on Thursday and will continue next week.

The Library briefing Autumn Budget 2025: A summary picks out the key announcements in the Budget and provides an overview of the latest forecasts.

How have think-tanks responded to the Autumn Budget?
Institute for Fiscal Studies

The Institute for Fiscal Studies (IFS) published an initial response to the Budget. The response described it “as a big Budget, but not in the way people were necessarily expecting” saying it contained “a big tax rise” as well as “a sizeable increase in borrowing in the short term”.

The IFS said the Chancellor had found a way to achieve “sizeable” tax increases without “increasing the main rates of National Insurance contributions, VAT or income tax” and tax rises were “skewed towards raising more from those with high incomes”.

The tax rises mean that the Office for Budget Responsibility (OBS) forecast £22 billion of headroom against the fiscal rule that the current budget must be in surplus in 2029/30. The IFS described this as “a sensible move for which the Chancellor deserves credit” saying it would help provide “greater insulation against economic turbulence.”

Despite tax changes, the IFS said the Budget was “certainly not” a “grand tax reforming Budget” and that the Chancellor showed “no real appetite for using tax reform to boost growth”.

In introductory remarks to an IFS event on the morning of 27 November, IFS Director Helen Miller said that despite speculation and a downgrade to the OBR’s medium-term productivity forecast, the Chancellor was not faced with a “big fiscal repair job” and was saved by “a stonking increase in the forecast for tax receipts”. She said that while the Chancellor was “unlucky to be the person in charge when the productivity downgrade came”, she also “got very lucky with the forecast on revenue”.

Ms Miller’s response described the Budget as “a borrow-to-spend Budget in the short term, and a combination of a tax-and-spend and tax-and-bank-it Budget in the medium term”.

National Institute of Economic and Social Research

Analysis published by the National Institute of Economic and Social Research (NIESR) argues that the Budget “locks in a high-tax, high-debt steady state in a world of low productivity growth and higher interest rates” and that the Budget demonstrated a “notable lack of economic vision beyond clearing fiscal hurdles”.

The NIESR response welcomed the forecast of £22 billion of headroom against the fiscal rule that the current budget must be in surplus in 2029/30. However, it though argued this level of headroom is “thin relative to the uncertainty around fiscal forecasts and the scale of potential shocks” and that the probability of meeting the fiscal rules “remains, in essence, a coin toss”. It said meeting this fiscal rule by 2029/30 “depends heavily” on growth in tax receipts later in the forecast period (close to the next general election), which “raises questions about political deliverability”.

It said abolishing the two-child benefit limit “will reduce child poverty”, though this will come at “at a rising fiscal cost”. It also predicted that increasing the National Living Wage from April 2026 would not increase participation in the labour market but would rather “push many low-income households to reduce hours” and use additional income gained “to substitute into childcare or other non-market activities”.

The Resolution Foundation

The Resolution Foundation’s Budget analysis Stairway to Headroom said the Chancellor faced three “big hurdles”: fixing the public finances, easing the cost of living squeeze, and taxing “smartly and fairly”.

It argued the Chancellor “squeaked over her first hurdle” of fixing public finances with the projected £22 billion of fiscal headroom, which earmarks “enough revenue to make her rules believable”. However, it also said public finances “look weaker over the next few years as a whole”.

But it said the Chancellor “skipped over the second hurdle” on the cost of living squeeze, through measures to lower energy bills, the freeze in rail fares and the abolition of the two-child benefit limit, described as “as welcome as it is overdue” and “the right priority”.

It said the Chancellor “wobbled” the third hurdle on taxing “smartly and fairly” though in the end “cleared it”, by “handing much of the bill to those who have got away lightly in the past”. It praised higher taxes on landlords, shareholders and savers, describing these measures as “a welcome step towards equal tax treatment of income sources”.

Institute for Public Policy Research (IPPR)

Harry Quilter-Pinner, interim Executive Director at the Institute for Public Policy Research (IPPR), described the Budget as making “real progress” on achieving the goals of stabilising public finances, helping drive higher and fairer economic growth, relieving pressure on working families and raising revenues to protect public services.

He argued the Chancellor made “good calls” on “taxing income from wealth and work more equally”, taxing high-value properties, ending the two-child limit and moving to cut energy bills, although it added that a “relentless war on bills” is required if “working people are to feel better by the end of the parliament”.

In a separate response, Zoë Billingham, Director of IPPR North, said the Budget “marks a big step forward in the devolution of real resources to local leaders”. She welcomed the power for Mayoral Strategic Authorities in England to create local overnight visitor levies, saying this will “allow mayors to raise tens of millions of pounds to reinvest in local priorities and our high streets”.

Institute for Government (IfG)

In a live blog the Institute for Government’s (IfG) Chief Economist Gemma Tetlow said the Chancellor had “squandered the opportunity to set out a clear vision for the tax system”, describing the Budget as “a jumble sale of tax announcements” with “little overall sense of what the Chancellor wants to achieve with the tax system or how the changes support her growth objectives”.

Giles Wilkes, IfG senior fellow, said the Budget was “not a budget designed around the theme of growth”, though it delivered “more stability” through higher fiscal headroom and maintained or increased capital spending.

A more detailed response from the IfG describes the increased headroom against the fiscal rules as “welcome” though also argues the Chancellor “made some choices that arguably undermine fiscal sustainability”, such as allowing borrowing to rise in the near term and planning tax rises that are “highly uncertain” such as new taxes on high value properties and electric vehicles. These tax rises are described as “politically convenient targets” and show “little evidence of a longer-term tax strategy”.

TaxPayers’ Alliance

The Chief Executive of the TaxPayers’ Alliance, John O’Connell, said the Budget would result in a “benefits bonanza” that will be “paid for by hard working taxpayers through their incomes, pensions, property, savings and beyond”.

It said the Chancellor “needs to urgently change course, by drastically reducing the benefits bill, bringing in targeted, growth generating tax cuts and deregulating the economy”.
It also criticised the “extraordinary leak from the OBR” prior to the Chancellor’s Budget speech.

Institute of Economic Affairs

Similarly, the Institute of Economic Affairs said the Chancellor has “raised the white flag in the battle for economic growth” and that measures including lifting the two-child benefit limit and avoiding a rise in the headline rate of income tax would be paid for “by hiking the tax burden to its highest ever through a dog’s dinner of damaging tax rises on working people and the businesses that drive growth”.

Commenting on the increase to the National Minimum Wage, Professor Len Shackleton, editorial and research fellow at the Institute of Economic Affairs and Professor of Economics at the University of Buckingham, described this measure as “in effect a further ‘tax’ on employing young workers” which is “likely to make it harder for young people to enter the labour market and push more onto benefits for years to come”. Professor Shackleton also describes the lifting of the two-child benefit limit as a measure that will “add substantially” to the overall cost of benefits and “reduce the incentive for parents to seek work or to work longer hours if they are in work”.

Adam Smith Institute

Mitchell Palmer, economist at the Adam Smith Institute described the Budget as a “tax-increasing budget that will harm economic growth”, arguing measures to increase taxes on capital and higher earners will “discourage exactly the business investment that we need to power productivity and wage growth”.

Joanna Marchong, Head of Communications and External Affairs at the Adam Smith Institute said that while individual Budget measures may “look modest”, Britain’s economic stability “will continue to be questioned” without measures to address “the ballooning welfare bill, missed house building targets” and “the effect of stealth taxes on workers and our plummeting productivity”.

Centre for Policy Studies

Centre for Policy Studies Director Robert Colvile described the Budget as “a bad Budget in every way”, saying the Budget raises tax to post-war highs, delays making “difficult decisions until the final years of the forecast period” and also “avoids any attempt at reforming and simplifying the tax system, in favour of making it even more complicated and anti-growth”.

Fraser of Allander Institute

The Fraser of Allander Institute at the University of Strathclyde said the Budget went for a “piecemeal approach”, with a range of smaller tax rises, including higher taxes on property, savings and dividends income, a new tax on electric cars and higher taxes on gambling, rather than a “broad-based increase in income tax rates”.

It said removing the two-child benefit limit will reduce child poverty in Scotland by around 1 percentage point in 2026-27, and it will free up £155 million the Scottish Government was planning to spend on mitigating the two-child limit in 2026-27. Despite this saving, it said the end of the two-child limit will also “generate some knock-on costs for Scottish Government”, as more households will be entitled to Universal Credit and some Scottish benefits like the Scottish Child Payment.

How have business organisations responded? British Chambers of Commerce

Shevaun Haviland, the Director General of the British Chambers of Commerce, said the Budget “made the right choice by not piling major new tax rises on businesses’ shoulders”, adding that businesses would welcome commitments to transport and infrastructure, support for youth employment, stamp duty relief, the reduction in business rates multipliers and some investment tax breaks.

But she said that many businesses will also be “disappointed” that the Budget “did not provide a more compelling blueprint to deliver transformational growth”, and that businesses will be worried cost pressures, including salary sacrifice changes, wage increases, and retention of the energy profits levy.

Confederation of British Industry

Similarly, Rain Newton-Smith, Chief Executive of the Confederation of British Industry (CBI) said the “government’s growth mission is currently stalled” and that measures such as adding National Insurance to salary sacrifice pension contributions and increases to the National Living Wage and National Minimum Wage will increase employment costs.

She said businesses will rue a missed opportunity to be bold and press on with much needed tax reform, simplification and alignment of incentives to catalyse business investment and job creation.

A separate summary of the Budget published by the CBI praised Budget measures such as increasing planning capacity, extending support for AI adoption to the Industrial Strategy's high-growth sectors through the BridgeAI programme and committing to appoint Procurement Innovation Champions in each government department. It said that the proposal to apply employee and employer National Insurance contributions to pension contributions made through salary sacrifice schemes from 2029 “will be a further cost on wage bills” and that not moving from the energy profits levy to “a genuine windfall profits charge” is a “missed opportunity”.

Federation of Small Businesses

Federation of Small Businesses policy chair, Tina McKenzie, described the Budget as a “tax-raising Budget”, saying the “record high tax burden” is the “cost of failure to get growth and trim spending”.

While she welcomed Budget measures on training for small and medium-sized enterprises (SMEs) and the new jobs guarantee scheme, she also argued that increases to dividend tax will discourage people from investing in their own businesses and that business rates measures “will not help small firms and high streets nearly enough”.

She said the government should prioritise “pro-business, pro-growth policies”, highlighting changes to the Employment Rights Bill and fixing the “broken small business energy market” as measures that would help small businesses.

Responses from other organisations Local Government Association

Cllr Kevin Bentley, Senior Vice Chairman of the Local Government Association (LGA) said that while local authority funding levels have increased in recent years, councils will be “rightly anxious” that the Budget “does not provide the increase in funding” councils “desperately need to ensure their financial sustainability, protect services, support local communities, and address national priorities”.

In a separate response on the high value council tax surcharge, Cllr Pete Marland, Chair of the LGA Local Government Resources Committee called on the government to “address practical concerns” about how the surcharge would work, arguing “additional funding raised through the council tax system must be available to support local authorities, particularly in the context of the current financial pressures they face”.

Cllr Amanda Hopgood, Chair of the LGA Children, Young People and Families Committee welcomed the announcement that the government will fund the full cost of special education needs and disabilities (SEND) provision from central government departmental spending from 2028/29. However, she said this “does not address existing deficits” local authorities have incurred through SEND provision, calling for the government to “write off… current accumulated deficits and any future deficits expected up to and including 2028/29”.

Joseph Rowntree Foundation

Alfie Stirling, Director of Insight and Policy at the Joseph Rowntree Foundation praised plans to remove the two-child benefit limit and other “bold and important interventions”, including plans to lower energy bills, lower transport costs and increases to the minimum wage and National Living Wage.

But he said that “housing costs and bills are still too high, our safety nets are too frail, and the cost to workers of caring for their loved ones is too great”, calling for the government go further to “close inequalities in our tax system that cost revenue and make it unfair”.

Trades Union Congress

Trades Union Congress (TUC) General Secretary Paul Nowak said the Chancellor has delivered “urgent relief to millions of hard-pressed households up and down the country and helped to rebuild our public services”, praising measures to reduce household energy bills and scrapping the two-child benefit limit as policies that will “disproportionately benefit those low and middle income households at the sharp end”.

He said the “task of repairing Britain will need years of sustained investment”, praising taxes on online gambling companies, the council tax surcharge and increased taxes on dividends and investments, and said the Chancellor has “built on the measures she announced last year to make our tax system fairer”.

Women’s Budget Group

In the response published by the Women’s Budget Group, Dr Sara Reis, Interim Director of the Women’s Budget Group praised the lifting of the two-child benefit limit as “a landmark step toward tackling child poverty in the UK” which will be “particularly transformative for single parents”. She also argued for “bolder measures that could’ve been funded through more ambitious changes to our tax system”.

What has the response been from political parties? Conservative Party

In her response to the Chancellor’s speech, Conservative Party leader Kemi Badenoch called the Budget “a total humiliation”, saying the Chancellor has “announced a new tax raid of £26 billion” and is “hiking taxes to pay for welfare”. She said that her “bad choices” are because of “the bad choices she made at the last disastrous Budget”.

Speaking to BBC Breakfast, Shadow Chancellor Sir Mel Stride said the Chancellor had made “wrong choices” and the government should be working on reducing the deficit and lowering taxes and “making tough choices” in order to “get growth going”.

Liberal Democrats

Liberal Democrat leader Sir Ed Davey said the government was elected “on a promise to tackle the cost of living and grow the economy” though this was “the second Budget in which they have failed to do either”. He added that the UK leaving the EU had “cost the Treasury £90 billion a year in lower tax revenue” and a “new trade deal with Europe” would help “cut the cost of living and grow our economy”.

Reform UK

Richard Tice, deputy leader of Reform UK described the Budget as a “car crash” which would be “damaging to business confidence”. Mr Tice argued the Chancellor had alternatives to tax increases, including ending quantitative tightening, reducing the foreign aid budget and stopping welfare payments to overseas nationals.

Green Party

Green Party Treasury spokesperson Adrian Ramsay said the Chancellor has “chosen to paper over the cracks” rather than take “transformational” measures to “tax extreme wealth fairly and tackle the cost-of-living crisis”. He praised the scrapping of the two-child benefit limit but argued “far more action is needed to end the scandal of child poverty”.

SNP

Dave Doogan, SNP Treasury spokesperson, said that the Budget supports the view that “taxes are up, borrowing is up, the cost of living is up, the cost of energy is up, spending is up” but that growth, the “central aim of the Chancellor”, is down. He said Scotland “deserves better than this Westminster version of groundhog day”.

In First Minister’s Questions in the Scottish Parliament, SNP leader and Scottish First Minister, John Swinney, welcomed the abolition of the two-child limit, but he also said the Budget would mean fuel bills would remain higher than when Labour came into office. He added that there would continue to be job losses in the north-east of Scotland because the government did not end the Energy Profits Levy.

Plaid Cymru

Speaking to ITV News, Plaid Cymru leader Rhun ap Iorwerth said the Budget “fails Wales and shows a Labour Government that doesn't understand the needs of Wales in any way”, adding it “failed to get to grips with the cost of living crisis in the way that Plaid Cymru would've liked to see”.

Sinn Féin

John O’Dowd, the Sinn Féin Minister of Finance in the Northern Ireland Executive welcomed the additional £370 million in funding for Northern Ireland, as well as the lifting of the two-child limit and increases in the minimum and National Living Wage. However, he said the Budget contained little to “support economic growth and for small to medium businesses” and “further strengthens the need for fiscal devolution”.

Democratic Unionist Party

The Democratic Unionist Party (DUP) Treasury Spokesman, Sammy Wilson, said it was “an unfair Budget, because it still relies on taking money from working people who are not mega-rich to pay for some of the Government’s grandiose schemes”.

However, he also welcomed the additional £370 million for Northern Ireland and £17 million for the cost of the Northern Ireland Protocol, but he argued that the Protocol and the Windsor framework “are costing the Northern Ireland economy dearly”.