Business
Rachel Reeves warns of harder choices to come as she hints at tax rises
Becky MortonPolitical reporter
Rachel Reeves has said the government is facing difficult choices, as she promised she would not take risks with the public finances.
In her speech at Labour’s annual party conference in Liverpool, the chancellor pledged to keep “taxes, inflation and interest rates as low as possible”.
But hinting at further tax rises in November’s Budget, she said the government’s choices had been made “harder” by international events and the “long-term damage” done to the economy.
Reeves is facing a difficult Budget, with economists warning tax rises or spending cuts will be needed for the chancellor to meet her self-imposed borrowing rules.
Pressed over whether she would have to put up taxes in a BBC interview ahead of her speech, Reeves said “the world has changed” in the last year – pointing to wars in Europe and the Middle East, US tariffs and the global cost of borrowing.
“We’re not immune to any of those things,” she added.
If taxes do go up in the Budget, this prepares the ground for the government’s argument for why this is necessary.
Reeves criticised previous Conservatives government, accusing Liz Truss of sending mortgage costs “spiralling” with her mini-budget.
And in comments that will be seen as a swipe at the Labour mayor of Greater Manchester, Andy Burnham, Reeves 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 – and we need to be honest about what that choice would mean.”
Burnham has continued his vocal criticism of Sir Keir Starmer during Labour’s conference and has not ruled out a leadership bid.
However, he prompted a backlash from some Labour MPs after he suggested ministers were “in hock to the bond markets” – a reference to the government’s self-imposed rules limiting spending and borrowing.
Despite dismissing the Tories as an “irrelevance”, Reeves repeatedly used the tagline: “Don’t ever let anyone tell you that there’s no difference between a Labour government and a Conservative government.”
Urging Labour activists to take “pride in what we are achieving”, she listed some of the party’s key pledges, including recruiting new neighbourhood police and opening school breakfast clubs.
It has been a torrid few months for the chancellor, who sparked a temporary rise in government borrowing costs in July following a tearful appearance in the Commons, amid speculation about whether she could keep her role.
Meanwhile, Reeves is facing pressure from some Labour MPs to increase spending, with many calling for the government to scrap the two-child benefit cap.
Ministers have hinted they could lift the cap in the Budget – a move which would cost an estimated £3.5bn a year.
In June the government also abandoned plans which would have cut nearly £5bn from the benefits bill, in the face of a major backbench rebellion.
However, delegates watching her conference speech in the main hall seemed determined to buoy the chancellor, with a standing ovation when she took to the stage and another when she addressed a protester holding a Palestinian flag interrupted her speech.
Reeves told the heckler: “We understand your cause and we are recognising a Palestinian state. But we are now a party in government, not a party of protest.”
Reeves also used her speech to criticise Reform UK, which has been topping opinion polls for several months, despite having only five MPs.
Labour has stepped up its attacks on the party at its conference.
“The single greatest threat to the way of life and to the living standards of working people is the agenda of Nigel Farage and the Reform Party,” the chancellor said.
“Whatever falsehoods they push, whatever easy answers they peddle, however willing they are to tear communities and families apart, they are not on the side of working people.”
Food bills are set to soar as much as 10 per cent this year as a direct consequence of the Iran war, a key industry body has warned.
The Food and Drink Federation (FDF), which represents 12,000 food and drink manufacturers, has hiked its inflation forecast for the year from 3.2 per cent to between nine and 10 per cent.
During the 2022 cost of living crisis, food inflation rose at a rate of 10.9 per cent, figures from the Food and Drink Federation (FDF) show, while the following year was even worse at 14.6 per cent.
Since then, it had dropped back to 2.7 per cent (2024) and 4.2 per cent (2025), but while this year had originally been forecast to deliver food inflation of 3.2 per cent, the latest assessment is that it will instead see a huge rise in the second half of 2026.
The FDF said the current situation is “unprecedented and hard to predict”, but it’s “clear that food inflation is going to rise in the months ahead”.
How much that adds to the average bill depends on the size and frequency of a consumer’s usual grocery habits, but on average, bills could rise by around £588, according to some estimates.
Consumer rights and review site Which? frequently assesses UK supermarkets for cost, and at the start of 2026, an average basket of 89 shopping products cost £161.56 at Aldi and up to £217.02 at Waitrose.
Assuming food inflation lands at the mid-point of the FDF forecast, 9.5 per cent, and that all products and supermarkets applied that uplift equally, that would move the costs of those shops up to £176.91 and £237.64 respectively.
Research from confused.com suggested the average UK household spent £119 each week on food shopping, which is £6,188 each year; a 9.5 per cent uplift to that equates to an extra £588 annually, or a total of just over £130 per week and £6,775 annually.
Chancellor Rachel Reeves is due to meet with some supermarket chiefs on Wednesday, including Sainsbury’s and Tesco, over discussions to assess the upcoming impact of price rises on the cost of living. The Treasury has described it as a “fact-finding” conversation.
Last month, Asda boss Allan Leighton called on Labour to do more to help businesses after creating “a lot of constraints” for them.
For food manufacturers, there is both a concern now and another yet to come in terms of energy cost rises.
Diesel – used in farm machinery – is up by 80 per cent since the start of the war, while fertiliser costs could increase further, as well as supply being constrained. The FDF also points to lost sales due to cancelled shipments to the Middle East, with UK firms regularly exporting cheese, cereals, chocolate and more to the region.
Dr Liliana Danila, chief economist at The Food and Drink Federation, said: “The food and drink sector is already feeling the force of this geopolitical shock. As one of the UK’s energy-intensive industries, manufacturers are facing mounting energy bills, rising transport and packaging costs and disruption across key supply chains.
“These pressures are hitting simultaneously and are a significant challenge for businesses to absorb.
“The current situation is unprecedented and hard to predict; however, given the scale and speed of these cost increases, and despite companies’ best efforts not to pass price increases on, it’s clear that food inflation is going to rise in the months ahead.”
The FDF says its upgraded inflation figures were based on “assumptions that the Strait of Hormuz opens to cargo traffic within the next two to three weeks”, as has been suggested by Donald Trump this week, and that most commodities, including oil, gas and fertiliser production, return to normal within a year.
In the past few months, the FDF has repeatedly called for the government to offer support to businesses in the sector from rising energy bills in the same way as it does to those in some other manufacturing areas.
GST collections: India’s net Goods and Services Tax (GST) collections increased to Rs 1.78 lakh crore in March 2026, marking a rise of 8.2% compared to the previous month, according to official figures released on Wednesday.Gross GST revenue for March stood at Rs 2 lakh crore, which is an 8.8% increase over the same month last year.Abhishek Jain, Indirect Tax Head & Partner, KPMG says, “GST collections continue to show steady 9% annual growth, supported by strong import activity this month and consistent compliance. While export refunds have eased this month but remain healthy overall for the year”Refunds during the month totalled Rs 0.22 lakh crore, up 13.8% on a year-on-year basis, which resulted in net GST collections of Rs 1.78 lakh crore.Domestic GST revenue reached Rs 1.46 lakh crore, registering a growth of 5.9%, while revenue from imports was recorded at Rs 0.54 lakh crore, rising sharply by 17.8% during the period.Post-settlement GST figures across states presented a varied trend. While industrially advanced states recorded strong growth, several others reported a decline.Maharashtra contributed the highest amount to the overall collections at Rs 0.13 lakh crore on a pre-settlement basis, followed by Karnataka and Gujarat.Among states showing an increase in post-settlement SGST collections were Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Gujarat, Maharashtra, Karnataka, Kerala, Tamil Nadu, Telangana and Andhra Pradesh, among others.On the other hand, states such as Jammu and Kashmir, Chandigarh, Delhi, Arunachal Pradesh, Meghalaya, Assam, West Bengal, Jharkhand, Odisha, Chhattisgarh and Madhya Pradesh, among others, registered a decline in post-settlement SGST revenues.
A wave of bullishness swept the Pakistan Stock Exchange on Wednesday, pushing the 100 Index up by more than 5,000 points to reach 153,700.
The surge reflects increased investor confidence and strong trading activity across major sectors.
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