All eyes will be on Rachel Reeves at the end of November as the Chancellor delivers her second Budget, writes David Crew.
However, as the National Institute of Economic Research 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.
These short-term choices come on top of a deeper challenge.
The UK economy has been stuck in a cycle of sluggish growth for several years.
Productivity continues to lag behind other advanced economies, business investment remains weak, and political uncertainty has weighed heavily on business confidence.
The latest economic forecast from the British Chambers of Commerce (BCC) has revised UK growth to 1.3 per cent this year, up from 1.1 per cent last quarter, reflecting stronger-than-expected activity in Q1.
But the UK outlook remains weak, weighed down by persistent inflationary pressures and ongoing global and domestic uncertainties.
GDP growth is projected to remain unchanged from the previous forecast at 1.2 per cent in 2026 and 1.5 per cent in 2027.
Business investment is now projected to grow by just 1.6 per cent in 2025, a significant downgrade from 4.8 per cent 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.
As companies navigate the complexities of shifting trade policies, heightened uncertainty affects business investment and planning.
Businesses need the right confidence and certainty to invest and grow.
The upcoming Autumn Budget will be an important moment to provide that stability – including no additional tax rises on business and greater support to unlock investment and safeguard growth.
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