Chancellor Rachel Reeves Faces High-Stakes Budget Amid Economic Challenges
Published 25 November 2025
Highlights
- UK Chancellor Rachel Reeves is set to announce her autumn budget amid pressure to address a multibillion-pound public finance shortfall.
- Business leaders, like Gerry Dunne from Pre-Met, urge the government to invest in manufacturing and address skills gaps.
- The budget aims to tackle NHS waiting lists, national debt, and the cost of living, with a focus on maintaining fiscal discipline.
- Economists predict a budget deficit of up to £20bn, with Reeves needing to raise £22bn to restore financial headroom.
- The government plans to invest £1.2bn in addressing skills gaps, creating 120,000 new training opportunities.
Chancellor Rachel Reeves is preparing to unveil her autumn budget on Wednesday, a pivotal moment for the UK government as it grapples with a significant public finance shortfall. With the economy under scrutiny, Reeves is expected to announce measures aimed at addressing NHS waiting lists, reducing national debt, and alleviating the cost of living pressures.
Manufacturing Sector Calls for Support
Business leaders, including Gerry Dunne, director at Pre-Met in Redditch, Worcestershire, have expressed concerns over the rising costs of running businesses and the declining demand for manufacturing parts. Dunne emphasized the need for government investment in manufacturing, highlighting the sector's role as the backbone of the UK economy. "We need to hear something positive because the costs of running any business have risen so much," he stated. Dunne also pointed to a potential 'brain drain' as older workers retire without sufficient younger replacements, urging investment in skills development.
Addressing the Fiscal Shortfall
Reeves faces the challenge of bridging a fiscal gap that economists estimate could reach up to £20bn. The Institute for Fiscal Studies predicts a £12bn deficit, necessitating Reeves to raise £22bn to regain financial headroom. The chancellor has committed to an "ironclad" fiscal rule, ensuring day-to-day spending matches receipts within five years, as per the Office for Budget Responsibility's forecast.
Economic Growth and Productivity Concerns
A significant factor contributing to the fiscal gap is a weaker-than-expected productivity forecast. The Office for Budget Responsibility's projections have been overly optimistic, with productivity growth falling short of pre-2008 levels. Each 0.1-percentage-point downgrade in productivity could increase public borrowing by £7bn by 2029-30. This comes amid a broader economic slowdown, despite the UK being the fastest-growing G7 country in the first half of the year.
Government's Investment in Skills
In response to concerns about the skills gap, the government is investing a record £1.2bn to address these issues, creating 120,000 new training opportunities. A Treasury spokesperson emphasized the government's pro-business stance and focus on reforming business rates, aiming to boost economic confidence and growth.
What this might mean
As Rachel Reeves prepares to deliver her budget, the economic and political stakes are high. Successfully addressing the fiscal shortfall while maintaining public confidence will be crucial. The government's investment in skills and manufacturing could bolster long-term economic growth, but immediate challenges remain. The response from the bond market and business leaders will be key indicators of the budget's impact. If Reeves can navigate these challenges effectively, it could strengthen her position and the government's economic strategy moving forward.
