Chancellor’s speech takes optimistic tone on economy

The Chancellor, Rachel Reeves, gave an important speech at the Labour Party conference last week, in which she appeared to change tone to speak more positively about the UK economy.

Recently she spoke about the upcoming Budget being a ‘painful’ one. Prime Minister Keir Starmer said the same in August and also warned of potential tax rises and spending cuts. As a result, there has been speculation on where spending will be cut and taxes raised, which seems to have affected consumer confidence.

However, the Chancellor’s speech at the party conference concentrated on the positive results she expects to bring to the economy. She plans to grow public spending in real terms as she believes that investment by the government will help the economy to grow. There may be changes upcoming to the rules on government borrowing so that more investment is allowed.

Why the change?

A recent report by market research company GfK showed in September that consumer confidence has been adversely affected by the dire warnings.

• Businesses are experiencing reductions in orders and website traffic as those concerns grow.

• Wealth managers and tax experts have reported that fears of a capital gains tax increase have triggered a surge in asset sales among business owners, property investors, and shareholders.

That isn’t good news for the Government, so it’s possible the change of tone has been a conscious one.

It may also mean that the Budget won’t be as painful as we might have been expecting, but we simply don’t know at this stage.

As always, we’ll keep you posted on any developments, but if you’re concerned about the impact of the Budget on your business or your personal affairs, please get in touch. It’s important to consider all options before you make any significant decisions, which will probably include taking account of media speculation but also consideration of your own personal circumstances and future goals.