Tax hikes may be necessary to fix damage caused by Brexit, says Reeves
Chancellor Rachel Reeves has confirmed that she is looking at the possible introduction of tax hikes and spending cuts during her November budget.
Speaking to Sky News, the Chancellor said the economy was still suffering from the impacts of leaving the EU, austerity policies, and Liz Truss’s mini-budget.
“Already, people thought that the UK economy would be 4% smaller because of Brexit,” she said.
“Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year on food and farming, goods moving between us and the continent, on energy and electricity trading, on an ambitious youth mobility scheme.
“But there is no doubting that the impact of Brexit is severe and long-lasting, and that’s why we are trying to do trade deals around the world, US, India, but most importantly with the EU so that our exporters here in Britain have a chance to sell things made here all around the world.”
Reeves’s comments come as she faces a delicate balancing act in addressing the fiscal deficit while still keeping unemployment in check and the economy growing.
The number of payrolled employees has continued to drop in the UK, data published on Tuesday (14 October) showed. The unemployment rate climbed to 4.8% in the three months to August, according to the Office for National Statistics (ONS), which was the highest since the March-May period in 2021. The revised estimate of payrolled workers in August 2025 shows an increase of 10,000 from July, though provisional estimates show a decrease of 10,000 for September.
In the three months to September 2025, vacancies in the UK fell by 9,000 (1.3%) to 717,000. This is the 39th consecutive period where vacancy numbers have dropped compared with the previous three months.
Average weekly earnings in the three months to August 2025 were up 4.7% on the year, excluding bonuses, down slightly from 4.8% last month. Including bonuses, the rate was 5%, up from last month’s figure of 4.8%.
