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UK FISCAL: Updates on latest Budget measures (1/2)

UK FISCAL
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  • Multiple media reports are suggesting that Chancellor Reeves is seeking to fund GBP40bln - for a combination of filling the fiscal "black hole" and also funding Labour's election spending pledges / public sector pay rises.
  • The Times has reported that there is a "backlash" from some of the non-protected government departments (i.e. outside of health, defence, childcare and foreign aid) about the scale of some of the cuts that they have been asked to model. The report also notes that no decisions have yet been made on the scale of these cuts but departmental spending is only expected to be settled for the 2025/26 fiscal year with the multi-year spending review likely to start early next year (we suspect this may be associated with some spending measures that more explicitly break manifesto commitments - more on that in our upcoming budget preview).
  • The Times also reports that there is likely to be no increase in capital gains tax (CGT) on residential property as the OBR estimates that any increase in the rate would lose money. Note that the previous Conservative government reduced the rate for higher rate taxpayers from 28% to 24% in the Spring Budget earlier this year.
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  • Multiple media reports are suggesting that Chancellor Reeves is seeking to fund GBP40bln - for a combination of filling the fiscal "black hole" and also funding Labour's election spending pledges / public sector pay rises.
  • The Times has reported that there is a "backlash" from some of the non-protected government departments (i.e. outside of health, defence, childcare and foreign aid) about the scale of some of the cuts that they have been asked to model. The report also notes that no decisions have yet been made on the scale of these cuts but departmental spending is only expected to be settled for the 2025/26 fiscal year with the multi-year spending review likely to start early next year (we suspect this may be associated with some spending measures that more explicitly break manifesto commitments - more on that in our upcoming budget preview).
  • The Times also reports that there is likely to be no increase in capital gains tax (CGT) on residential property as the OBR estimates that any increase in the rate would lose money. Note that the previous Conservative government reduced the rate for higher rate taxpayers from 28% to 24% in the Spring Budget earlier this year.