UK Economic and Political Developments: Budget 2025, Business Rates, Workers' Rights, and Housing Market
Independent brewers in the UK report record rates of pub closures and note that over 100 breweries have folded in the past year. The Society of Independent Brewers and Associates, representing around 700 beer makers, has warned Chancellor Rachel Reeves that recent business rates reforms threaten the viability of the hospitality sector. Budget measures include permanently lower tax rates for over 750,000 retail, hospitality, and leisure properties, funded by increased rates on large businesses. The package also provides £3.2 billion in transitional relief alongside expanded small business relief. Despite this, hospitality firms warn that these changes will curb investment and hiring due to ending Covid-era support and insufficient rate relief. By 2029, pubs are expected to pay approximately 76% more in business rates, compared to about a 16% increase for large online tech companies. Brewers are urging Reeves to delay revaluations or increase discounts for pubs. UK Hospitality chair Kate Nicholls expressed concern that budget efforts to level the playing field are unraveling, which could raise bar prices, while additional cost pressures like wage rises and duties are passed on to consumers.
Rachel Reeves's Budget 2025 has drawn criticism for disproportionately benefiting bond markets, asset managers, and hedge funds rather than the most vulnerable populations. Analysis revealed that Office for Budget Responsibility (OBR) forecast disclosures preceding the red book were unusual and appeared to contradict Reeves's narrative, prompting critiques of how the chancellor framed tax rises as motivated by productivity and long-term fiscal constraints rather than market pressures alone. By 2029–2030, about £26 billion a year in additional taxes are projected, with roughly half allocated to buffering fiscal rules, a quarter covering government U-turns, and about 17% funding new spending such as the scrapping of the two-child cap on child benefit. The budget also includes measures to contain fuel bills, prescription charges, and train fares, while facilitating potential Bank of England interest rate cuts. The controversy around Reeves intensified following the resignation of OBR chief Richard Hughes over a leak, with commentators accusing the chancellor of weaponising bond market discipline against her own party and voters, reflecting concerns over a lack of statecraft and voter-centered policy.
In related political news, on 1 December 2025, Prime Minister Keir Starmer defended Chancellor Rachel Reeves from accusations that she misled the public in the run-up to the autumn budget. The debate centers on Reeves allegedly citing bleak OBR forecasts to justify tax rises despite the forecasts being more positive. A Guardian Politics Weekly podcast titled "Can Keir Starmer save Rachel Reeves?" discussed the prime minister's recent speech and whether it could distract from the backlash against Reeves. The coverage highlighted challenges within Your Party’s inaugural conference and analyzed Labour's economic policy and budget messaging.
On workers' rights, new legislation was agreed to reduce the qualifying period for unfair dismissal protections from two years to six months, effective 1 January 2027. Individuals employed from July 2026 onwards will be eligible for these protections once they have six months' service by the start date. Labour leader Angela Rayner withdrew an amendment to bring the start date earlier after consultations with Business Secretary Peter Kyle. This compromise, reached with businesses and unions and involving key figures like Rayner and Justin Madders, also includes protections for workers on zero-hours and variable contracts, introduces fines for employers who deny unions the right to engage with workers, and lifts compensation caps. The bill is set to return to the Commons next week, with Labour calling the measures a significant win while pledging to campaign for stronger rights in the future.
In the housing market, Nationwide reported a 0.3% month-on-month rise in UK house prices in November 2025, with the average price increasing to £272,998 from £272,226 in October. Annual house price growth slowed to 1.8%, the slowest since June of the previous year, amid subdued consumer confidence and a softer labour market. Despite this, housing activity has been supported by easier borrowing costs and lenders' readiness to provide credit. England plans to introduce a high-value council tax surcharge from April 2028 on homes valued over £2 million, featuring four bands with rates from £2,500 to £7,500 annually. This surcharge is expected to impact less than 1% of English properties and about 3% in London. Economists and lenders believe these property tax changes are unlikely to significantly disrupt the housing market or demand, projecting only modest effects on a small segment of buyers. Analysts foresee a potential uplift in activity early in 2026, following historical trends of January market improvements.
