Chancellor Rachel Reeves has unveiled the new Labour Government’s first Budget, outlining a package of measures aimed at stabilising the economy, easing pressure on household finances and boosting investment in British business.
Reeves said the UK is “beating the forecasts”, with economic growth for 2024 revised up to 1.5% from 1%. Wage growth in the Government’s first year has also exceeded increases seen across the first decade of the previous Conservative administration.
However, she acknowledged that significant challenges remain after what she described as “years of decline”. The Budget, she said, is designed to strengthen the economy without returning to austerity or increasing borrowing.
Cost of Living and Public Services
A central focus of the Budget is the cost of living. Measures include an average £150 reduction in annual energy bills and policies that the Treasury says will bring down inflation by 0.4%.
The Chancellor also pledged to tackle NHS backlogs with the creation of 250 new Neighbourhood Health Centres, and confirmed ongoing efforts to reduce borrowing, arguing that lower government debt will support falling interest rates—now cut five times since the election.
According to the Treasury, the UK is on track to cut borrowing faster than any other G7 economy, doubling fiscal headroom to £21.7 billion.
Backing Business and Growth
For businesses, the Chancellor announced a series of tax-focused initiatives aimed at supporting investment, particularly for high street firms and smaller enterprises.
From April 2026, more than 750,000 retail, hospitality and leisure organisations will benefit from permanently lower tax rates, worth nearly £900 million a year. A £4.3 billion support package will cap business rates increases for sectors most affected by revaluations.
The Government will maintain the UK’s 25% corporation tax rate—the lowest in the G7—and introduce targeted tax reliefs for SMEs. Measures to boost growth also include funding hundreds of additional planners across England to accelerate the construction of 1.5 million homes.
Further support for high-growth companies includes expanded access to enterprise tax incentives, a temporary three-year stamp duty exemption for new UK stock market listings, and the continuation of the £1 million Annual Investment Allowance.
Youth Employment and Skills
Reeves also unveiled a £1.5 billion package over three years to deliver the Youth Guarantee and the Growth and Skills Levy, aimed at helping young people “earn or learn”. Under the plan, all apprenticeships for under-25s in small and medium-sized businesses will be fully funded. A new Jobs Guarantee forms part of the scheme to help tackle youth unemployment.
The Government says the combined measures will “renew the economy and communities” and restore long-term stability.
