This Week in Business 21/11/25

Markets flinched again this week in reaction to more speculation about UK Chancellor Rachel Reeves’ upcoming budget. Some volatility in the run-up to a budget is normal, but investors have been especially jumpy due to conflicting signals emerging out of Number 10. First, on 4^th November, the Chancellor stated in a speech that “If we are to build the future of Britain together, we will all have to contribute to that effort,” which many took as a signal that she may abandon the Labour Party’s pledge to leave income taxes alone.

Then, on 13^th November, the FT reported that Reeves had changed her mind. Gilts and the pound swung initially in response, as investors worried that Reeves was forsaking fiscal prudence to appease voters. However, Bloomberg promptly reported that Reeves was considering this move because of better-than-expected forecasts on the UK economy, which seemed to bring traders some calm.

Investors will continue to be on edge until budget day on 26^th November. Significant government funds continue to pay for interest on a growing deficit, and the Chancellor appears to be running out of options to replenish the Treasury’s coffers.

Many also worry about the implications for future growth and competitiveness of the UK market, with Bloomberg reporting on 18^th November that ultra-wealthy families have been taking cash out of their UK-based businesses, changing their trust structures, and even relocating abroad in anticipation of higher tax bills in the future.