Client Update - 4th December 2025

Our chancellor has allegedly not been forthcoming with the truth. She has also implicated the Prime Minister in her misinformation. The Head of the Office of Budget Responsibility (OBR) has been sacrificed after the release of last week’s budget information before the actual budget. I remember apologising for repeatedly writing about President Trump earlier in the year, and it feels that I am now continuously writing about our embattled chancellor. If the markets and the public can no longer trust what she is telling us, then should she be allowed to stay? I am not sure she would have survived in a normal business environment.

The ”omni” scandal view is an interesting one. As Labour have a scandal on a weekly basis, then each one carries less and less importance and the news flow moves on to the following week, expecting something else to report on. Maybe this saves her position once more.

When Reeves called an early Tuesday morning press conference in the lead up to her budget, she did make it clear that big tax rises were coming, and she was right. She talked about the importance to her of measures to try to address the cost of living, and they were there in her Budget last week. She expressed a desire for more wriggle room in the spreadsheets against her self-imposed fiscal rules – so-called "headroom". She delivered on that too, as she did on maintaining long term, investment spending.

The key point is, she also talked about productivity, the OBR’s reduction in estimated productivity growth and this decision by the OBR had big implications for Reeves – impacting the numbers, spreadsheets and therefore the calculations and trade-offs she would have to make. Hard choices needed to be made. However, she neglected to mention one key matter.

It now turns out that tax receipts as a result of wage growth inflation were much better than expected and more than offset the reduction in productivity growth and she knew this at the time and did not mention it. The OBR has since made that very clear and set out the timetable of when it told the Treasury what – including that the chancellor knew about the tax receipts data at the time of the news conference. A week later the Financial Times broke the news that income tax rates would not be going up as a result of this increased tax revenue.

Hopefully, as a result of this disappointing week, the chancellor will at least now share with us good news along with the seemingly endless bad news and firmly on my Christmas list is a hope for honesty and transparency. I would also ask for a growth plan – please – but I fear that this may be a step to far, even in the season of giving. I need some good news, so I will go back to looking at clients’ portfolios, that have had a remarkably strong 2025, given all of the negativity and concerns over high US equity valuations. This has again underlined our “stay calm and keep invested” methodology – try and ignore short term noise and focus on the longer-term opportunities. Do have a good weekend.