The Chancellor of the Exchequer, Rachel Reeves, presented her 2025 Autumn Budget to Parliament on 26 November and published supporting documents on the gov.uk website.
When the Chancellor finished her statement in the Commons, the Office for Budget Responsibility (OBR) published updated forecasts for the UK’s economic and fiscal outlook. The OBR is the independent public finances watchdog that produces the official forecasts for the economy and public finances used by the Chancellor.
The Chancellor said that the 2025 Autumn Budget is “a Budget for fair taxes, strong public services, and a stable economy.” She said that “[in] the face of challenges on our productivity, I will grow our economy through stability, investment and reform. I’ve met my fiscal rules and built our economic resilience for the future.”
Selected announcements
Personal tax thresholds
The government has announced it will extend the freeze to personal tax thresholds (income tax and National Insurance contributions) for three further years, from April 2028 to 2031.
The OBR expects this will raise £23 billion in total by 2030/31.
National Insurance contributions and pension salary sacrifice schemes
The government announced that from April 2029 only the first £2,000 of pension contributions made by each employee through a salary sacrifice scheme will be exempt from National Insurance contributions (NICs).
Currently no cap exists. Employer and employee NICs will be due for pension contributions made through salary sacrifice schemes exceeding that cap.
The OBR estimates this will raise £4.7 billion in 2029/30, and £2.6 billion in 2030/31.
High Value Council Tax surcharge
The government will introduce a High Value Council Tax Charge from April 2028. It will apply at a flat rate of £2,500 per year on properties valued between £2 million and £2.5 million, rising to £7,500 a year for properties valued at over £5 million in value.
The OBR forecasts this will raise £0.4 billion a year from 2028/29.
Motoring taxes
The government has extended the temporary 5p cut in the rates of fuel duty to September 2026 and cancelled the inflation-linked rise in fuel duty rates. This means fuel duty rates have not been uprated for 16 years.
The government has committed to a staggered reversal of the 5p cut between September and December 2026, and to increase fuel duty rates by Retail Price Index inflation from April 2027.
Other announcements
The two-child limit on Universal Credit will be removed from April 2026.
This change is expected to reduce the number of children in poverty by 450,000 by 2029/30, compared with what it otherwise would have been.
The cost is forecast to be £2.4 billion in 2026/27 and then rise, reaching £3.2 billion in 2030/31.
Changes to the Renewables Obligation and the Energy Company Obligation will reduce household energy bills by around £150 on average in Great Britain from April 2026.
Public spending
The Chancellor made several changes to public spending at this Budget – in total, public spending will now be about £32 billion a year higher in 2029/30 than had previously been forecast.
This is largely the result of much higher welfare spending, which is itself mostly driven by the reversal of previous reforms to disability benefits, and the removal of the two-child benefit cap.
The Chancellor has largely left departmental spending allocations up to 2028/29 unchanged, and has pencilled in reductions to spending in the years after that.
However, the OBR has identified pressures on public spending that may make these reductions difficult to implement.
The OBR’s public finances forecast
Government borrowing
The Office for Budget Responsibility (OBR) forecasts that government borrowing will decrease from £150 billion in 2024/25 to £138 billion in 2025/26.
Borrowing is then forecast to fall to £67 billion in the final year of the OBR’s current forecast period.
More borrowing in most years, compared with the March 2025 forecast
The OBR forecasts that borrowing from 2025/26 to 2028/29 will be around
£16 billion higher, on average, a year compared with its March 2025 forecast.
Much of the additional borrowing is because the OBR expect underlying borrowing to be higher.
The Chancellor’s decisions contribute around £5 billion a year to the increase.
Borrowing in 2029/30 is forecast to be around £6 billion lower, compared with the March 2025 forecas.
The Chancellor’s tax decisions raise sufficient revenues to more than cover an increase in the OBR’s underlying borrowing forecast and the Chancellor’s spending decisions.
Government debt
Government debt was equivalent to 93.6% of GDP at the end of 2024/25.
The OBR forecasts that it will increase to 97.0% at the end of 2028/29. It will then fall to around 96.1% of GDP at the end of 2030/31.
The fiscal rules
The government has targets for its day-to-day budget and its net financial debt in 2029/30, widely known as the Chancellor’s ‘fiscal rules’.
The OBR assessed that both rules were being met in its forecast.
Day-to-day budget rule
The first rule says that the current budget must be in surplus in 2029/30.
The government is forecast to meet this target by a margin of 0.6% of GDP (£22 billion) in 2029/30, compared with a margin of 0.3% of GDP in the March 2025 forecast.
The OBR says the probability of this target being met is 59%.
