This is going to be a big budget – not to mention a complex budget.

It could, depending on how it lands, determine the fate of this government. And it’s hard to think of many other budgets that have been preceded by quite so much speculation, briefing, and rumour.

All of which is to say, you could be forgiven for feeling rather overwhelmed.

But in practice, what’s happening this week can really be boiled down to three things.

1. Not enough growth

The first is that the economy is not growing as fast as many people had hoped. Or, to put it another way, Britain’s productivity growth is much weaker than it once used to be.

The upshot of that is that there’s less money flowing into the exchequer in the form of tax revenues.

2. Not enough cuts

The second factor is that last year and this, the chancellor promised to make certain cuts to welfare – cuts that would have saved the government billions of pounds of spending a year.

But it has failed to implement those cuts. Put those extra billions together with the shortfall from that weaker productivity, and it’s pretty clear there is a looming hole in the public finances.

3. Not enough levers

The third thing to bear in mind is that Rachel Reeves has pledged to tie her hands in the way she responds to this fiscal hole.

She has fiscal rules that mean she can’t ignore it. She has a manifesto pledge which means she is somewhat limited in the levers she can pull to fill it.

Put it all together, and it adds up to a momentous headache for the chancellor. She needs to raise quite a lot of money and all the “easy” ways of doing it (like raising income tax rates or VAT) seem to be off the table.

So… what will she do?

Quite how she responds remains to be seen – as does the precise size of the fiscal hole. But if the rumours in Westminster are to be believed, she will fall back upon two tricks most of her predecessors have tried at various points.

First, she will deploy “fiscal drag” to squeeze extra income tax and national insurance payments out of families for the coming five years.

What this means in practice is that even though the headline rate of income tax might not go up, the amount of income we end up being taxed on will grow ever higher in the coming years.

Second, the chancellor is expected to squeeze government spending in the distant years for which she doesn’t yet need to provide detailed plans.

Together, these measures may raise somewhere in the region of £10bn. But Reeves’s big problem is that in practice she needs to raise two or three times this amount. So, how will she do that?

Most likely is that she implements a grab-bag of other tax measures: more expensive council tax for high value properties; new CGT rules; new gambling taxes and more.

No return to austerity, but an Osborne-like predicament…

If this summons up a particular memory from history, it’s precisely the same problem George Osborne faced back in 2012. He wanted to raise quite a lot of money but due to agreements with his coalition partners, he was limited in how many big taxes he could raise.

The resulting budget was, at the time at least, the single most complex budget in history. Consider: in the years between 1970 and 2010 the average UK budget contained 14 tax measures. Osborne’s 2012 budget contained a whopping 61 of them.

And not long after he delivered it, the budget started to unravel. You probably recall the pasty tax, and maybe the granny tax and the charity tax. Essentially, he was forced into a series of embarrassing U-turns. If there was a lesson, it was that trying to wodge so many money-raising measures into a single fiscal event was an accident waiting to happen.

Except that… here’s the interesting thing. In the following years, the complexity of budgets didn’t fall – it rose. Osborne broke his own complexity record the next year with the 2013 budget (73 tax measures), and then again in 2016 (86 measures). By 2020 the budget contained a staggering 103 measures. And Reeves’s own first budget, last autumn, very nearly broke this record with 94 measures.

In short, budgets have become more and more complex, chock-full of even more (often microscopic) tax measures.

Read more from Sky News:
What tax measures are expected in budget?
The political jeopardy facing Rachel Reeves in budget

In part, this is a consequence of the fact that, long ago, chancellors seem to have agreed that it would be political suicide to raise the basic rate of income tax or VAT. The consequence is that they have been forced to resort to ever smaller and fiddlier measures to make their numbers add up.

The question is whether this pattern continues this week. Do we end up with yet another astoundingly complex budget? Will that slew of measures backfire as they did for Osborne in 2012? And, more to the point, will they actually benefit the UK economy?

The chancellor is vowing to “take the fair and necessary choices” in today’s budget, as she seeks to grow the economy while keeping the public finances under control.

Rachel Reeves said she will not take Britain “back to austerity” – and promised to “take action to help families with the cost of living”.

She said she will “push ahead with the biggest drive for growth in a generation”, promising investment in infrastructure, housing, security, defence, education and skills.

But following a downgrade in the productivity growth forecast – combined with the U-turns on the winter fuel allowance and benefits cuts as well as “heightened global uncertainty” – the chancellor is expected to announce a series of tax rises as she tries to plug an estimated £30bn black hole in the public finances.

Conservative shadow chancellor Sir Mel Stride has said Ms Reeves is “trying to pull the wool over your eyes”, having promised last year she would not need to raise taxes again. Liberal Democrat deputy leader Daisy Cooper has accused her and the prime minister of “yet more betrayals”.

‘Smorgasbord’ of tax rises

A headline tax-raising measure tomorrow is expected to be an extension of the freeze on income tax thresholds for another two years beyond 2028, which should raise about £8bn.

This move will be seized upon by opposition parties, given that the chancellor said at last year’s budget that extending the freeze, first brought in by the Tories in April 2021 to raise revenue amid vast spending during the pandemic, “would hurt working people” and “take more money out of their payslips”.

What is being described as a “smorgasbord” of tax rises is also expected to be announced, having backed away from a manifesto-breaching income tax rise.

Some of the measures already confirmed by the government include:

• Allowing local authorities to impose a levy on tourists staying in their areas

• Expanding the sugar tax levy to packaged milkshakes and lattes

• Imposing extra taxes on higher-value properties

It is being reported that the chancellor will also put a cap on the tax-free allowance for salary sacrifice schemes, raise taxes on gambling firms, and bring in a pay-per-mile scheme for electric vehicles.

What could her key spending announcements be?

As well as filling the black hole in the public finances, these measures could allow the chancellor to spend money on a key demand of Labour MPs – partially or fully lifting the two-child benefits cap, which they say will have an immediate impact on reducing child poverty.

Benefits more broadly will be uprated in line with inflation, at a cost of £6bn, The Times reports.

In an attempt to help households with the cost of the living, the paper also reports that the chancellor will seek to cut energy bills by removing some green levies, which could see funding for some energy efficiency measures reduced.

Other measures The Times says she will announce include retaining the 5p cut in fuel duty, and extending the Electric Car Grant by an extra year, which gives consumers a £3,750 discount at purchase.

The government has already confirmed a number of key announcements, including:

• An above-inflation £550 a year increase in the state pension for 13 million eligible pensioners

• A freeze in prescription prices and rail fares

• £5m to refresh libraries in secondary schools

Extra funding for the NHS will also be announced in a bid to slash waiting lists, including the expansion of the “Neighbourhood Health Service” across the country to bring together GP, nursing, dentistry and pharmacy services – as well as £300m of investment into upgrading technology in the health service.

And although the cost of this is borne by businesses, the chancellor will confirm a 4.1% rise to the national living wage – taking it to £12.71 an hour for eligible workers aged 21 and over.

For a full-time worker over the age of 21, that means a pay increase of £900 a year.

Read more from Sky News:
Reeves issues ‘pick ‘n’ mix’ warning ahead of budget
Are we set for another astoundingly complex budget?

Britons facing ‘cost of living permacrisis’

However, the Tories have hit out at the chancellor for the impending tax rises, with shadow chancellor Sir Mel Stride saying in a statement: “Having already raised taxes by £40bn, Reeves said she had wiped the slate clean, she wouldn’t be coming back for more and it was now on her. A year later and she is set to break that promise.”

He described her choices as “political weakness” = choosing “higher welfare and higher taxes”, and “hardworking families are being handed the bill”.

The Liberal Democrat deputy leader Daisy Cooper is also not impressed, and warned last night: “The economy is at a standstill. Despite years of promises from the Conservatives and now Labour to kickstart growth and clamp down on crushing household bills, the British people are facing a cost-of-living permacrisis and yet more betrayals from those in charge.”

She called on the government to negotiate a new customs union with the EU, which she argues would “grow our economy and bring in tens of billions for the Exchequer”.

Green Party leader Zack Polanski has demanded “bold policies and bold choices that make a real difference to ordinary people”.

The South African Reserve Bank issued its second financial stability report for 2025, identifying digital assets and stablecoins as a new risk as the number of users in the country continues to grow.

In a report released on Tuesday, South Africa’s central bank identified “crypto assets and stablecoins” as a new risk for technology-enabled financial innovation. The bank reported that the number of combined users on the country’s three largest crypto exchanges reached 7.8 million as of July, with about $1.5 billion held in custody at the end of 2024.

“Due to their exclusively digital – and therefore borderless – nature, crypto assets can be used to circumvent the provisions of the Exchange Control Regulations,” said the report, referring to regulations to control the inflows and outflows of funds to South Africa.

In addition to crypto assets like Bitcoin (BTC), XRP (XRP), Ether (ETH), and Solana (SOL), the central bank said that there had been a “structural shift” in the adoption of stablecoins based on a significant increase in trading volume since 2022: 

“Whereas Bitcoin and other popular crypto assets were the main conduit for trading crypto assets until 2022, USD-pegged stablecoins have become the preferred trading pair on South African crypto asset trading platforms […] This is due to the notably lower price volatility of stablecoins compared to unbacked crypto assets.”

Related: South Korea stablecoin framework stalls as regulators split over banks’ role

The Financial Stability Board, a financial watchdog for entities in the G20, reported in October that South Africa had “no framework in place”  for regulating global stablecoins, and only “partial regulations in place” for cryptocurrencies. The central bank said that “risks may build up undetected” from crypto, posing a threat to the country’s financial stability until an appropriate regulatory framework is established.

Different story with South Africa’s government on crypto

The central bank’s warning echoed similar sentiments from 2017, when deputy governor Francois Groepe said issuing digital currencies would be too risky for the country.

However, among policymakers in South Africa’s government, the sentiment may be slightly more bullish.

In 2022, the country’s Financial Sector Conduct Authority designated cryptocurrency as a financial product and subsequently issued licenses for crypto companies to conduct business.