UK Chancellor Rachel Reeves today set out a Budget that raises £26 billion in tax measures to pay for £11.3 billion of extra spending, a package whose rollout was complicated after the Office for Budget Responsibility accidentally published key measures ahead of her speech.
The OBR’s slip, which sparked an early stir in the markets, brought immediate scrutiny to every part of Reeves’ plan and kept political stakes high.
This Budget matters because the large tax haul is designed to shore up the UK’s shaky public finances while expanding targeted programmes such as support for the NHS, children’s welfare, and infrastructure.
However, the surprise OBR publication and weaker growth projections have made the government’s trade-offs much starker, with implications stretching from household budgets to the critical “fiscal headroom” that determines flexibility for future shocks.
Spending priorities: what the £11.3B buys
Among the headline spending commitments are moves to scrap the two-child benefit cap, addressing poverty directly, new investments in the NHS, including centre and digital upgrades, and significant allocations for social housing and green infrastructure.
Reeves also earmarked support for building new council homes and accelerating energy efficiency schemes; the OBR’s leaked document and Budget summary confirm these as top priorities.
Each promise is framed as tightly targeted, not broad giveaways: Reeves described the package as “about backing families and the backbone of our economy, rather than unfunded splurges.”
Notably, much of the new spending is “front-loaded,” meaning households and the health service could feel a tangible boost in the next two years, with experts saying it might support demand in a sluggish economy.
Treasury officials told reporters the strategy “avoids reckless borrowing while making fair choices for Britain’s future.”
Taxes, thresholds and household impact: who pays?
To fund the £26 billion in new revenue, Reeves’ Budget introduces a freeze to personal income tax thresholds until 2030–31, bringing an estimated £8.3 billion a year.
It also adds limits on pension salary-sacrifice benefits, higher dividend tax rates, a mansion tax on properties worth over £2 million, and new levies on online gambling and high-value real estate.
For example, the income tax band freeze means a middle earner on £40,000 could pay around £350 more by 2028, while higher property taxes and dividend hikes target the wealthy.
The application of National Insurance to salary-sacrifice pension contributions will cut back perks for higher earners, and gambling tax changes are set to raise another £1.1 billion by the end of the parliament.
Opposition critics claim the package is “too heavy a burden for working households,” arguing that “a tax take at a historic high is squeezing living standards.”
Reeves argued that every additional pound raised will be directed toward schools, hospitals, and other vital national priorities, while still preserving £22 billion in fiscal headroom to safeguard public finances.
The fiscal and political test ahead
Whether Reeves’s budget will balance credibility and growth remains to be seen. The OBR’s accidental leak put immediate political pressure on the government but also injected complete transparency into the day’s proceedings.
Market reaction was initially choppy, sterling fell, and gilt yields swung before steadying as investors absorbed the details.
Analysts are now watching how departmental spending reviews will be shaped, and whether future OBR forecasts will force further hard decisions as economic growth risks remain in focus.
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