Budget 2025: Three things Rachel Reeves’s speech boils down to – and two tricks the chancellor will fall back on
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 today 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.
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The Budget Explained – in 60 seconds
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.
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Can the budget fix economic woes?
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. 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?
Key takeaways
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For years, US crypto firms operated under overlapping rules from the SEC, CFTC, FTC and FinCEN. The revised 2025 plan signals Washington’s intent to build a more flexible and structured framework tailored to digital assets.
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The SEC is moving toward a model centered on innovation, capital formation, market efficiency and investor protection. This marks an acknowledgment that crypto requires dedicated rules rather than adaptations of older regulations.
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The plan may lead to exemptions, safe harbors, DLT-specific transfer agent rules and crypto market structure amendments. These steps could help integrate digital assets into traditional market infrastructure.
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The plan’s success will depend on cross-agency coordination and international alignment between regulatory agencies. Strong execution could encourage other jurisdictions to adopt more consistent global standards for crypto.
Since its early years, the US cryptocurrency industry has operated in an unclear regulatory environment. Different agencies, such as the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), the Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN), have been overlooking different aspects of the crypto ecosystem. In this scenario, crypto enterprises found it difficult to determine what was allowed and what was not.
The SEC’s revised 2025 plan is likely to usher in positive change. It suggests that Washington, DC is seeking a more flexible regulatory framework that streamlines crypto oversight while supporting innovation.
This article discusses the possible outcomes of the plan, its key points, the advantages it may bring and the risks it could involve. It also explores how the plan may influence the crypto ecosystem worldwide.
Why the SEC’s revised 2025 plan matters
Cryptocurrency has evolved well beyond its early speculative phase. Digital tokens are now traded on major platforms, institutional investors allocate funds to them, and tokenization is gradually entering traditional finance. In a fast-changing crypto landscape, regulations are always trying to catch up.
The SEC’s new agenda reflects a shift in approach. It emphasizes innovation, capital management, market efficiency and investor protection. This shows the SEC’s acknowledgment that cryptocurrencies require tailored rules rather than adaptations of existing ones.
Industry representatives have highlighted the lack of clear compliance guidelines and the conflicting interpretations of existing rules. They also point out the tendency to prioritize enforcement over guidance. The SEC’s 2025 agenda includes initiatives that align with many industry concerns.
Did you know? After the Mt. Gox exchange collapse in 2014, Japan became the first major economy to pass a dedicated crypto law in 2017. Japan officially recognized Bitcoin (BTC) as a legal payment method and encouraged exchanges to adopt bank-level security standards.
Major elements of the SEC’s 2025 plan
This comprehensive agenda outlines the key areas and initiatives the SEC will pursue to safeguard investors:
New rules for issuing and selling digital assets
The SEC intends to establish clear guidelines for the issuance of digital assets, which may include exemptions or safe harbor provisions for token projects. This would help determine when a token is considered a security, when it is not and what information issuers must provide. For startups, such clarity would reduce the uncertainty that surrounds token launches.
Permission for crypto trading on national securities exchanges
The SEC is considering changes that would allow digital assets to be traded directly on registered national exchanges and alternative trading systems. These potential amendments aim to bring crypto assets closer to the regulated infrastructure used for traditional stocks, improve surveillance, strengthen investor protections and reduce reliance on less regulated offshore platforms.
Simplified disclosure requirements
The plan aims to streamline and modernize disclosure and compliance obligations for publicly listed companies, including those involved with digital assets. This would reduce administrative burdens for both cryptocurrency-focused firms and traditional businesses and encourage broader adoption.
Clearer rules for crypto intermediaries
Broker-dealers, custodians and trading platforms have operated under uncertain regulatory requirements. The new agenda seeks to clarify how existing rules for securities intermediaries apply to cryptocurrency activities. This would allow more financial institutions, banks and fintech companies to offer crypto-related services with greater confidence.
Streamlining disclosures and reducing compliance burden
The SEC intends to propose a framework for streamlining disclosures. The agency’s primary role involves establishing disclosure standards designed to enhance clarity and mitigate investor risk. With the revised plan, the agency aims to reduce the compliance burden for public companies, particularly regarding shareholder proposals.
The following table provides a brief overview of the SEC’s revised 2025 plan:
Benefits of the SEC’s revised 2025 plan
The SEC’s 2025 plan aims to enhance protection for individual investors, promote fair competition for issuers and financial institutions and strengthen the integrity and efficiency of the capital markets.
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For cryptocurrency startups: Clearer regulations could lower legal risks and speed up product development. They would allow companies to stay in the US and grow rather than relocate abroad.
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For traditional financial institutions: Banks and asset managers would gain regulated pathways to participate in digital assets while remaining fully compliant.
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For investors (retail and institutional): Investors would benefit from better disclosures, safer trading venues and more consistent oversight of platforms. The plan could reduce risks such as hidden leverage or manipulative trading practices.
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For regulators and markets: A more unified approach would reduce overlap between agencies. It would enhance market surveillance and align cryptocurrency regulation with established financial safeguards.
Did you know? Swiss regulators classify tokens based on their economic function as payment, utility or asset, similar to how farmers classify livestock. This approach helped Switzerland become one of the earliest global hubs for token innovation.
Remaining questions, risks and potential global impact
While the SEC’s revised 2025 plan looks promising, its success depends on several factors. For instance, it remains to be seen whether US agencies can coordinate effectively with regulators in other countries, given the global nature of cryptocurrencies.
The SEC will need to find an appropriate balance between fostering innovation and protecting investors. This balance will determine whether the 2025 agenda becomes successful or remains a statement of intent.
If the plan does not deliver tangible results, market participants will continue to face uncertainty. The US may lose innovation to other countries and risk its leadership in digital asset finance.
When the US updates its regulatory framework, other jurisdictions take notice. Clearer rules in the US will encourage similar regulatory changes in the European Union, the UK and Asia and foster international cooperation. This will lead to more consistent global standards for stablecoins, tokenization and custody.
The SEC’s 2025 regulatory agenda marks a significant shift toward replacing uncertainty with structure. If the proposed measures succeed, the US may enter a new phase in which cryptocurrency regulation supports responsible development and the protection of investors.
US President Donald Trump is slated to choose a new Federal Reserve chair by Christmas, and the frontrunner, Kevin Hassett, could be a boon for the crypto industry.
Hassett is a White House economic adviser who has reportedly emerged as a strong candidate for the Fed chair position. He is the director of the National Economic Council and oversaw the digital asset working group directed by the White House earlier this year.
Trump has been trying to increase his administration’s control over the Federal Reserve, the country’s central bank, thereby expanding the White House’s influence over monetary policy.
The nomination process has not yet begun, but observers are already speculating about what a Hassett chairmanship could mean for US monetary policy and crypto.
Fed frontrunner Kevin Hassett has supported crypto in the past
Hassett was an assistant professor of economics at the Columbia Business School in the 1990s. While there, he also served as an economist in the Division of Research and Statistics at the Federal Reserve Board of Governors. He was also a policy consultant with the Department of the Treasury under the administrations of former presidents George H.W. Bush and Bill Clinton.
Hassett briefly sat on the White House Council of Economic Advisors during the first Trump administration. During the president’s second term, Hassett served as director of the National Economic Council (NEC), a part of the executive branch that the president uses for setting domestic and international economic policy.
Despite a lack of clear public statements, Hassett is widely regarded as pro-crypto. In June, he revealed a stake of at least $1 million in Coinbase and that he was compensated at least $50,001 for his role on the exchange’s Academic and Regulatory Advisory Council.
The NEC, where he serves as director, oversaw the development of the White House’s digital asset working group, which published a paper earlier this year outlining the administration’s policy on crypto.
The Fed doesn’t oversee securities or commodities, so its policy changes can’t affect crypto regulation. But a crypto-friendly Fed could still have a positive impact on the industry in several ways.
Related: Bitcoiners perk up as odds of a December Fed rate cut almost double
Firstly, lower interest rates generally mean better crypto prices. Juan Leon, a senior investment strategist at Bitwise, said that the implications for markets are “strongly bullish.” He called Hassett an “aggressive ‘dove’ who has publicly criticized current rates for being too high and advocated for deeper, faster cuts.”
Zach Pandl, head of research at digital asset investment platform Grayscale, said, “On the margin Hassett should be considered positive for crypto => supports rate cuts, past Coinbase advisor, NEC director during White House crypto policy push.”
The Fed also regulates banks, namely bank holding companies, payment system access, reserve requirements and liquidity and risk rules. Tightening or loosening these rules could affect crypto companies’ access to a number of services, including:
Still, the White House has yet to make a clear nomination. Treasury Secretary Scott Bessent announced in late October that Hassett was on a short list of five nominees to replace Jerome Powell. These included former Fed Governor Kevin Warsh, current Fed Governors Christopher Waller and Michelle Bowman, and BlackRock executive Rick Rieder. A nomination is expected by Christmas.
Trump administration threatens an independent Fed
Trump has been attempting to assert more control over the Federal Reserve as a means to exert greater influence over his preferred monetary policies.
Earlier this year, he attempted to fire Federal Reserve Governor Lisa Cook. Her refusal to step down sent the case to the Supreme Court, which, for the time being, has allowed her to stay on.
In a court filing, Cook’s lawyer, Abbe Lowell, called the attempt a “broadside attack on the century-old independence of the Federal Reserve System.”
The Council of Foreign Relations has lauded the independence of this system, stating that it “shields the Federal Reserve from undue political influence, such as pressure from the White House to lower interest rates ahead of an election, which could offer short-term political gains but cause long-term economic harm.”
An independent Fed also “enhances the Fed’s credibility” and makes the market more confident in its decisions. “Crucially, it also empowers the Federal Reserve to take difficult but necessary actions, even when they are unpopular.”
John Authers, a senior editor for markets and Bloomberg Opinion columnist, wrote that choosing Hassett “appears to be about loyalty.”
“Trump regards nominating Jerome Powell eight years ago as a big mistake. Waller, Warsh and Rieder all in different ways might establish themselves as independent from the administration.”
George Pollack, a senior US policy analyst at Signum Global Advisors, reportedly said that Trump will nominate Hassett “because of his confidence that Hassett will be the candidate most likely to support the administration’s priorities.”
Were the Fed to become another arm of the administration, the results could be good for crypto markets in the short term but disastrous elsewhere. Lower-than-needed interest rates could score cheap political points but lead to increased inflation.
The Center for American Progress explained, “Knowing that the rates will be based on well-researched data, and not political whims, assures the world that the U.S. economy will remain relatively stable and its markets will remain rational.”
Magazine: Getting scammed for 100 Bitcoin led Sunny Lu to create VeChain
Chancellor Rachel Reeves has unveiled the long-anticipated budget.
It comes after a report from the Office for Budget Responsibility (OBR), which analyses policies decided on by the chancellor, was published early in error.
Here are the key points:
Tax thresholds will be frozen for an additional three years from 2028
The point at which people start paying higher rates of tax will be held. It can mean earners will be dragged into higher tax bands when they get a pay rise.
This will raise £8bn.
Taxes hiked on gambling
The gambling industry is going to be taxed more, to raise more than £1bn.
Remote gaming duty will rise to 40% from 21% while online betting tax will rise from 15% to 25%.
The bingo tax is being abolished from April.
New mileage-tax on electric cars
Electric car drivers will be subject to a 3p charge for every mile they drive.
Plug-in hybrid vehicles will be charged 1.5p per-mile.
This is expected to raise £1.4bn, according to the OBR report.
Change to capital gains tax for employee ownership trusts
Capital gains tax relief on business sales made to employee ownership trusts will be reduced from 100% to 50%.
This is expected to raise £900m.
Other tax hikes
The tax paid on dividends – payments to shareholders – as well as property and savings income will rise 2 percentage points, raising £2.1bn.
Two-child benefit cap scrapped
The government will scrap the two-child benefit cap from April 2026.
This currently limits the amount of benefits parents can claim for their third child or subsequent children who were born after 6 April 2017.
By scrapping the cap, the government hopes an estimated 450,000 children will be lifted out of poverty.
According to the OBR’s analysis of the chancellor’s budget this will cost the government £2.3bn.
Salary-sacrifice pension contributions above £2,000 to face national insurance
From April 2029, national insurance will be charged on salary-sacrificed pension contributions above an annual £2,000 threshold.
This will raise £4.7bn and will come into effect in 2029.
State pension increases
There’ll be an increase of £440 per year for the basic state pension and an increase of £575 per year for the new state pension.
Reforms for cash ISAs
Savers will only be able to put up to £12,000 into cash ISAs tax-free each year. This is reduced from £20,000 in the hopes that Britons will instead put their money into stocks and shares ISAs.
Over 65s can retain the full £20,000 allowance.
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Tax-free cash ISA allowance cut to £12,000
Fuel duty to be frozen until next September
The duty, or tax, paid on diesel and petrol has been frozen at 52.95p per litre.
This will cost the government £2.4bn next year and £900m each year after.
Mansion tax introduced on properties worth more than £2m
It means the most expensive properties in the country, worth more than £2m, will have to pay extra. This will be £2,500 for properties worth £2m to £2.5m and up to £7,500 for homes valued at £5m.
This will raise £400m, the OBR has confirmed.
Cut in energy bills
The average annual energy bill will be cut £150 from April by reducing levies.
The Energy Company Obligation (ECO) scheme, which is designed to tackle fuel poverty and help reduce carbon emissions, will be scrapped.
Luxury cars removed from the Motability scheme
This scheme, which provides subsidies for people with a disability to lease a vehicle, is part of PIP.
Freeze on student loan repayment rate
The student loan repayment threshold will be maintained for three years.
Training for apprentices under-25 free at small companies
A new Youth Guarantee will give £820m towards tyring to guarantee every young person a place in college, an apprenticeship or personalised job support.
After 18 months, 18-to-21 year-olds will be offered paid work instead of benefits.
Wider inheritance tax rules
A change to inheritance tax will allow the transfer of 100% relief allowance between spouses.
Uber and Bolt journeys to be taxed
Journeys taken on ride-hailing apps such as Uber and Bolt will be subject to tax in a measure being described as a taxi tax.
Rail fares frozen
Rail fares will be frozen for the first time in 30 years, with passengers not paying any more for season tickets, peak return and off-peak return tickets between major cities.
Business rate changes
Business rates will be reduced for 750,000 retail, hospitality and leisure properties, which will be funded by an increase on premises worth more than £500,000.
The tax reduction will be paid for by an increase in taxes on properties worth £500,000 or more, like the warehouses used by online giants.
Stamp duty break for companies new to London Stock Exchange
A stamp duty holiday for companies newly listing on the London Stock Exchange will be in place for three years.
OBR forecast
Next year, economic growth is expected to be lower than the OBR thought in March. GDP will be 1.4% in 2026, down from a previously anticipated 1.9%.
It will be 1.5% for the rest of the decade.
According to the independent forecasters, prices are expected to rise faster than the OBR thought in March due to higher wages and food costs.
Inflation will be 3.5% this year and 2.5% next.
The amount of fiscal headroom the chancellor has doubled to £22bn in 2029-30. This means a £22bn financial cushion against price shocks such as the COVID-19 pandemic and soaring energy costs.
NHS technology and new neighbourhood health centres
The government will invest £300m in NHS technology and 250 new neighbourhood health centres with the aim to expand more services into communities.
Over 100 centres, including in Birmingham, Truro and Southall, are expected to be delivered by 2030.
Prescription costs frozen
The cost of an NHS prescription in England will be frozen at £9.90.
2.6% of GDP to be spent on defence
The government will spend 2.6% of GDP, a measure of everything produced in the economy, on defence.
National wage increases
From next April, the national living wage will rise by 4.1% to £12.71 an hour for eligible workers aged 21 and over.
The national minimum wage rate for 18 to 20-year-olds will increase by 8.5% to £10.85 an hour.
For 16 to 17-year-olds and those on apprenticeships, the national minimum wage will increase by 6% to £8 an hour.
Nations and local mayors
The government of Northern Ireland government will get an additional £317m, £505m for the Welsh government and £820m for the Scottish government.
“Flexible” funding worth £13bn has been pledged for seven regional mayors to invest in skills, business support and infrastructure.
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