Reeves warns of hard choices to come as UK hit by ‘global headwinds’

Rachel Reeves has said she is facing “harsh global headwinds” as she hinted at further tax rises to come in the Budget.

The Chancellor used her Labour Party conference speech to insist that she would keep control of the public finances and would “not take risks with the trust placed in us by the British people”.

But she acknowledged that her choices had been made “harder” by international events and the “long-term damage” done to the economy.

Ahead of her keynote speech in Liverpool Ms Reeves had warned that “the world has changed” since she promised business chiefs she would not repeat the tax raid of her first budget.

“I think everyone can see in the last year that the world has changed, and we’re not immune to that change,” the Chancellor told BBC Radio 4’s Today programme.

“Whether it is wars in Europe and the Middle East, whether it is increased barriers to trade because of tariffs coming from the United States, whether it is the global cost of borrowing, we’re not immune to any of those things.

“It’s very important that we maintain those commitments to economic stability because we rely on people to buy Government debt to be able to finance the things that we’re doing as a country.

“I wish it wasn’t so, but I am Chancellor in the world as it is, not the world that I might wish it to be.”

She told the conference: “In the months ahead we will face further tests, with the choices to come made all the harder by harsh global headwinds and the long-term damage done to our economy, which is becoming ever clearer.”

Experts have said Ms Reeves will have to increase taxes or cut spending to fill a black hole in her budget, which the National Institute of Economic and Social Research has estimated could be as much as £50 billion.

Ms Reeves said she would “not take risks with Britain’s economic stability”, adding: “I will make my choices at that budget.

“They will be choices to take our country forward.

“And whatever tests come our way, whatever tests come my way, I make this commitment to you: I will take no risks with the trust placed in us by the British people.”

Speaking to Sky News after the speech, senior Cabinet Office minister Darren Jones failed to rule out whether Labour would stick by its manifesto commitment to not raise VAT, income tax or national insurance for working people.

“I am not ruling anything out, or anything in. All I’m saying is today the manifesto stands.

“We’ve got a budget process to go through, and any decisions will be announced to Parliament in the normal way,” the PM’s Chief Secretary said.

In her speech Ms Reeves:

– Confirmed plans for a youth guarantee, offering paid work to young people who had spent 18 months not in employment, education or training.

– Said the Government would will “push ahead with our plans for Northern Powerhouse Rail” linking towns and cities across northern England.

– Set out plans for a library in every English primary school.

– Targeted a deal with the European Union for an “ambitious agreement on youth mobility” to help secure “the maximum economic and cultural opportunities”.

With Labour trailing Reform UK in the polls, Sir Keir Starmer’s leadership has been questioned, with Greater Manchester mayor Andy Burnham claiming he had been urged by some MPs to challenge him.

Ms Reeves acknowledged the year had “brought its fair share of challenges for our party and our country” and added “they won’t be the last”.

She said “whatever tests confront us, have faith, because our party and our country have overcome greater challenges than these”.

Mr Burnham has suggested the UK has “got to get beyond this thing of being in hock to the bond markets” as he set out plans for billions more borrowing.

But Ms Reeves appeared to criticise Mr Burnham’s economic approach, warning of the dangers of unrestrained borrowing.

She said: “There are still those who peddle the idea that we could just abandon economic responsibility and cast off any constraints on spending.

“They are wrong – dangerously so.”

Ms Reeves’ conference speech in Liverpool was interrupted by a pro-Palestinian heckler.

She told him: “We understand your cause and we are recognising a Palestinian state.

“But we are now a party in government, not a party of protest.”

Published: 29/09/2025 by Radio NewsHub