Published: Tuesday, November 4, 2025 · 8:53 AM | Updated: Tuesday, November 4, 2025 · 8:53 AM
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The FTSE 100 (^FTSE) and European stocks were lower as markets opened on Monday, as Rachel Reeves made a pre-budget speech in an effort to manage expectations about new fiscal policy.
The next raft of economic changes from the chancellor is set for 26 November and is now expected to include provisions that could increase taxes — a move which may breach manifesto commitments which the Labour party was elected on.
“I understand that – these are important choices that will shape our economy for years to come,” Reeves said in an 8.10am broadcast.
Read more: Rachel Reeves likely to need £26bn of tax rises in budget, think-tank warns
“But it is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country.”
When questioned, Reeves refused to rule out tax rises. “As chancellor, I have to face the world as it is, not the world that I want it to be,” she said.
Labour pledged not to hike income tax, VAT or national insurance in its general election manifesto. No chancellor has increased the basic rate in 50 years and it would be a risk politically.
Reeves said she would stand by her fiscal rules but would have to increase the economic headroom for the government.
Her comments came a day after prime minister Keir Starmer also said that there are “hard and serious choices ahead”.
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London’s premier index dipped 0.8% in early trade. Mining stocks Antofagasta (ANTO.L), Fresnillo (FRES.L) and Anglo American (AAL.L) fell the most, dragging down the index
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The DAX (^GDAXI) in Germany dropped 1.6%
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Over in Paris, the CAC 40 (^FCHI) lost 1.4%
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The pan-European STOXX 600 (^STOXX) pulled 1.1% lower
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The pound lost 0.3% against the dollar (GBPUSD=X) dipping to the $1.31 mark
LIVE 6 updates
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Pound dips and gilts wobble
Neil Wilson, UK investor strategist at Saxo Markets, said:
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Reeves may need £26bn tax rise
Chancellor Rachel Reeves will likely need to announce £26bn in tax rises in her upcoming autumn budget to put the UK’s public finances in order, the Resolution Foundation has warned.
The think-tank said on Tuesday that its autumn budget preview highlighted that an anticipated downgrade to the UK’s “trend” productivity growth is “likely to be large at nearly 0.3 percentage points”.
This refers to the five-year forecasts for the UK economy and public finances, provided by the Office for Budget Responsibility (OBR) alongside the budget, which Reeves is due to deliver on 26 November.
The Resolution Foundation said that given that productivity growth is weak in the near-term, the hit to public finances would be confined to the back end of the five-year forecast period, with the expectation that borrowing will increase by around £14bn in 2029/30. Higher borrowing costs are set to add a further £6bn to borrowing, the think-tank said, along with £7bn from policy U-turns since March.
At the same time, the Resolution Foundation said that changes to the economic outlook could offer some relief to the chancellor. For instance, the think-tank said that a “stronger outlook for pay could offset almost all the fiscal pain from lower productivity and reduce borrowing by £13bn”.
Read more on Yahoo Finance UK
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Reeves speech on deck
Rachel Reeves just spoke from Downing Street, answering reporters questions. She said:
The government is “focused entirely on the priorities of the British people.”
Principles include protecting the NHS and improving the cost of living.
She said the government is in a difficult situation because of:
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Continual threat of global tariffs and inflation slow to come down
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Cost of government borrowing has increased around the world
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Commitment to reforming welfare state costs money
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US stock futures fall
US stock futures dropped Tuesday morning after a mixed session on Wall Street that saw AI optimism in megacap companies drive the S&P 500 and Nasdaq Composite higher.
Dow Jones Industrial Average futures (YM=F) lost 0.5%. S&P 500 futures (ES=F) slid down 0.8% and Nasdaq 100 futures (NQ=F) dropped 1.1%.
AI-heavy tech names once again fueled gains on Monday. Amazon notched a record close after announcing a new partnership with OpenAI, helping the Nasdaq (^IXIC) advance nearly 0.5%. The S&P 500 (^GSPC) rose roughly 0.2%, while the Dow (^DJI) fell about 0.5%.
Strong Q3 results and elevated AI spending from major cloud players continue to underpin investor confidence. The “Magnificent Seven” stocks remain market drivers, though their performance has grown uneven with the indexes they are part of as an increasing amount of companies from major gauges are reporting in the red.
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Good morning!
Hi! Lucy Harley-McKeown here. We’re gearing up for another day of markets news — and to watch chancellor Rachel Reeves give an unprecedented speech ahead of the budget on tax rises.
Reeves will begin speaking at 10am UK time, for around 25 minutes, as discontent brews in Westminster about a potential manifesto breach on income tax.
Also on the slate:
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The Bank of England’s Sarah Breeden sits down for a fireside chat at Santander International banking conference on ‘Financial stability and growth in the UK’, at 11:40am, in Madrid.
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US JOLTS jobs numbers are slated — but look likely to be postponed or cancelled due to the US government shutdown.
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An interest rate decision by the Bank of Australia.
Earnings-wise:
UK: Associated British Foods, BP (BP.L) and Domino’s Pizza (DOM.L)
Europe: Ferrari (RACE.MI)
US: Electronic Arts (EA), AMD (AMD), Spotify (SPOT), Pfizer (PFE), Apollo Global Management (APO), Super Micro Computer (SMCI), Uber (UBER), Marriott International (MAR), Match Group (MTCH)
Japan: Nintendo (NTO.SG)
Asia/Saudi: Aramco (2222.SR)
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