"All eyes will be on the Rachel Reeves at the end of November, as the Chancellor delivers her second Budget. However, as the National Institute of Economic Research (NIESR) highlights, she faces a "trilemma" - how to pay for her spending plans, keep her promise not to raise taxes on working people, and still stick to her own borrowing rules."
"Business investment is now projected to grow by just 1.6% in 2025, a significant downgrade from 4.8% in the last forecast. The previous forecast followed ONS data at the time, which suggested stronger Q1 investment, but this has since been revised down to levels more in line with weak business sentiment. BCC surveys also show that rising costs, particularly the national insurance increase, have further weighed on firms' investment plans."
Rachel Reeves faces a fiscal 'trilemma': fund spending plans, keep a pledge not to raise taxes on working people, and adhere to borrowing rules. The UK economy has experienced several years of sluggish growth, with productivity lagging other advanced economies, weak business investment, and political uncertainty weighing on confidence. The BCC revised 2025 GDP growth up to 1.3% from 1.1% due to stronger Q1 activity and public spending support. Growth is forecast at 1.2% in 2026 and 1.5% in 2027. Business investment is downgraded to 1.6% in 2025, with rising costs and national insurance increases hurting investment; export growth remains modest.
Read at London Business News | Londonlovesbusiness.com
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