Rachel Reeves is set to address the public in a significant speech before the Budget, pledging to safeguard the NHS and enhance the financial situation for struggling individuals in the UK.

Facing a substantial fiscal deficit of £20-£30 billion, the Chancellor is anticipated to commit to making tough decisions to address the economic challenges. Reeves, who is preparing for her second Budget presentation on November 26, emphasizes that these decisions will have long-term implications for the economy.

Recent remarks by Keir Starmer, where he refrained from reiterating the Labour Party’s commitment to shielding workers from tax hikes, have sparked speculation that Reeves might introduce an income tax increase at the upcoming Budget, potentially conflicting with the party’s electoral promises.

In a statement from Downing Street, Reeves will clarify the importance of the decisions she will make, emphasizing the need for understanding the current economic circumstances and the guiding principles behind her choices. She asserts that the upcoming Budget will establish a solid economic foundation for the country, aligning with the government’s values of fairness and opportunity.

As part of her plan to address the cost of living, Reeves is contemplating measures to reduce energy bills, including a potential reduction in the VAT rate on electricity and gas. This adjustment could save the average household approximately £86 annually.

Additionally, a prominent think tank, the Resolution Foundation, is urging Reeves to take decisive actions in the Budget to restore fiscal stability. Among their proposals is a 2p increase in income tax, alongside a corresponding 2p reduction in employee national insurance to alleviate the impact on working individuals.

James Smith, research director at the Resolution Foundation, highlights the potential benefits of reallocating the tax burden, emphasizing the importance of a Budget that prioritizes economic stability, wage protection, and poverty alleviation while fostering growth.