The week ahead 24 November 2025 - Chancellor prepares to walk Budget tightrope
What to watch out for in the UK economy and property market this week.
The Chancellor of the Exchequer, Rachel Reeves, will deliver a Budget speech on Wednesday in which she must reassure the financial markets, while simultaneously addressing backbench demands for more spending.
This autumn has seen Reeves follow the recent pattern of Chancellors leaking policy ideas to the press to see how they are received. This, however, has been at the expense of business and consumer sentiment, as the torrent of speculation has left many unsure of where they stand financially. This has been a recipe for businesses and households going into ‘wait-and-see’ mode until the Budget is announced.
Indeed, last week saw the PMI business activity index and the GfK consumer confidence index both decelerate in November – although not alarmingly so. The composite PMI index slid from 52.2 in October to 50.5 in November. The GfK consumer confidence index declined from -17 in October to -19 in November.
Budget speculation in the weekend press included:
- Talk of a rollback of the National Insurance relief on salary sacrifice private pension contributions.
- A new electric vehicle (EV) ‘pay per mile’ tax; although the EV purchase grant may be extended by a year.
- Dividing the upper council tax band in order to increase taxation on the most expensive houses.
- An extension of the freeze on income tax thresholds.
- An end to the two-child cap on benefits – a major concession to Labour backbenchers.
- Hints that reform of sickness benefits might be revisited.
- A freeze on rail fares in England in 2026.
It is surprising that so many measures that increase spending are potentially going to be announced, given the focus of this Budget was expected to be restoring the Chancellor’s fiscal headroom. Consequently, it will be interesting to see the reaction of the financial markets on Wednesday afternoon, and whether they feel enough has been done to strengthen the government’s fiscal position.
However, last week served as a reminder that we have all been hearing some exaggeration lately of how bad the government’s debt situation is. Figures from the Office for National Statistics showed the UK’s government debt as a percentage of GDP edged down slightly from 95.1% in September to 94.5% in October. In December 2024, the figure stood at 95%, so for all the talk of the national debt ‘spiralling’, it has been fairly stable this year. Nor is debt at 94.5% of GDP especially high for a G7 economy. The USA finished last year at over 120%, and you have to go back to 2016 for it to be under 100%.
As well as the Budget, next week will see the release of data on UK car production and house prices.
This week's figures
Friday 28 November
UK Car Production, October
51.1k previous
58.5k forecast
The September data for car production was negatively impacted by the cyber-attack on Jaguar Land Rover (JLR), so we expect output to have strengthened in October as production restarted at JLR plants.
Friday 21 November
Nationwide House Price Index, y-on-y, November
2.4% previous
2.2% forecast
Through a combination of the approach of the Budget, plus general signs households are nervous about spending, we believe house price growth may have slowed in November.
