28 Nov 2025
In its response to the 2025 Autumn Budget, the Institute for Fiscal Studies (IFS) has stated that Chancellor Rachel Reeves is 'choosing to spend more and borrow more' than she previously said she would.
The IFS said that the Chancellor is 'relying heavily' on tax rises towards the end of the parliament in a 'spend now, pay later' move.
According to the IFS, the Office for Budget Responsibility's (OBR's) latest forecast 'did not hand the Chancellor much of a fiscal repair job'. It noted that before taking policy changes into consideration, Ms Reeves would have a budget surplus of £4 billion in 2029/30. Once U-turns have been accounted for, the IFS said the deficit would have been 'very small'.
The think tank praised the Chancellor for increasing her fiscal headroom to £22 billion, branding it a 'sensible move' for which she deserves credit. It notes, however, that taking uncertainties into consideration, this headroom is 'still not that large a buffer'.
In its analysis the IFS stated that Ms Reeves 'shows no real appetite for using tax reform to boost growth'.
Helen Miller, Director of the IFS, commented: 'The decision to increase her headroom, when she didn't strictly need to, deserves credit. It means that it will require a larger shock to blow the Chancellor off course.
'This in turn should mean that we can expect a period of greater stability and more muted policy speculation. And we really should all hope for that.'