British Chancellor of the Exchequer Rachel Reeves has announced a sweeping fiscal plan aimed at addressing a £40 billion gap in public finances, pledging substantial new funding for the UK’s essential public services. In her address to lawmakers, Reeves outlined a budget designed to provide financial stability while bolstering underfunded sectors, particularly the National Health Service (NHS). This budget, the first from the Labour Party since it reclaimed power after 14 years in opposition, marks a significant shift in economic policy and signals Labour’s commitment to long-term growth and public service revitalisation.

Reeves emphasised the Labour government’s shift towards a more investment-driven economic approach, altering fiscal rules to allow for increased spending on development and growth initiatives. A cornerstone of her budget is an additional £25 billion allocation for the NHS, which has been struggling with unprecedented waiting lists in the aftermath of the COVID-19 pandemic. Declaring her proposals as essential for national progress, she highlighted the need to stabilise public finances, support the workforce, and rebuild Britain’s social infrastructure.

To fund these initiatives, Reeves introduced a substantial tax increase, largely targeting businesses. The rise in National Insurance contributions paid by employers—from April, to 15 percent—will help raise an estimated £25 billion annually over the next five years. Reeves justified these moves as necessary to address the financial strain left by the previous Conservative government. While mindful of past fiscal missteps, such as those under former Prime Minister Liz Truss that rattled bond markets, Reeves assured that her administration would maintain disciplined borrowing.

In addition to higher National Insurance contributions, Reeves announced measures to close tax loopholes, including adjustments to capital gains, inheritance taxes, and contributions from private equity executives and non-domiciled residents. While Labour’s Prime Minister Keir Starmer had called on “those with the broadest shoulders” to bear more tax responsibilities, Reeves clarified that individual income tax rates would remain stable until at least 2028-29. She further supported households by extending a freeze on fuel duty and reducing taxes on draught beer served in pubs, offering relief to both consumers and local businesses.