Rachel Reeves has declined to rule out raising income tax at next month’s Budget, according to reports.

The Chancellor has previously insisted that Labour’s manifesto commitment not to raise income tax, national insurance or VAT “stands” when questioned about how she will bridge a fiscal black hole in November.

But asked about reports the Treasury was considering an income tax hike, the BBC said Ms Reeves told reporters on Friday she would “continue to support working people by keeping their taxes as low as possible” but was still “going through the process” of writing the Budget.

The Chancellor said: “Although I can’t talk about individual measures at this stage, I understand that the cost of living is still people’s number one concern.”

Ms Reeves is widely expected to use the Budget to increase taxes once again, with the Institute for Fiscal Studies estimating she needs to find £22 billion of tax rises or spending cuts to meet her self-imposed fiscal rule.

The gap comes as a result of higher borrowing costs, weak growth and an expected downgrade to official productivity forecasts, although recent better-than-expected inflation figures have eased the pressure slightly.

Raising the basic rate of income tax by 1p could raise around £8 billion, but would break a clear manifesto pledge.

It would also be the first time the basic rate has been increased since the 1970s.

The Chancellor is also reported to be considering cutting the amount of money people can save in cash Isas as part of a drive to encourage investment in stocks and shares.

It is understood that no decision has yet been made and several options are being considered, including halving the allowance from £20,000 to £10,000.

Treasury minister Lucy Rigby told the Telegraph the Government was “looking at the right balance between cash and shares in the Isa”.

She said: “The bottom line is, we want people to be better off and one way we can do that is to build a shareholding democracy in this country.”

Meanwhile, The Times reported that the Chancellor would use the Budget to increase the minimum wage once again, and make further moves towards abolishing lower minimum wage rates for younger people.

The Social Security administration on Friday announced that its benefits will increase by 2.8% in 2026, giving retirees an average monthly boost of more than $56. The rise reflects moderating inflation after several years of higher cost-of-living adjustments (COLA).The increase will take effect in January for nearly 71 million Social Security recipients, while about 7.5 million people receiving Supplemental Security Income will see higher payments starting December 31.The announcement, which was scheduled for last week, was delayed due to the US federal government shutdown.Recipients saw a 2.5% increase in 2025 and a 3.2% rise in 2024, following a historic 8.7% jump in 2023 driven by record-high inflation. The COLA is funded by payroll taxes collected from workers and employers, up to an annual salary cap that will rise to $184,500 in 2026 from $176,100 in 2025.Social Security Administration Commissioner Frank Bisignano said in a statement that the annual adjustment “is one way we are working to make sure benefits reflect today’s economic realities and continue to provide a foundation of security.” However, many seniors believe the increase won’t be enough to meet rising living costs, reported AP.Polling from AARP shows that many older Americans share that concern. Only 22% of Americans over 50 believe a COLA of around 3% is enough to keep up with inflation, while 77% disagree. According to the MIT Living Wage Calculator, a single adult living in Florence, South Carolina, spends about $10,184 annually on housing, $3,053 on medical expenses and $3,839 on food.Emerson Sprick, director of retirement and labor policy at the Bipartisan Policy Center, said in a statement that cost-of-living increases “can’t solve all the financial challenges households face or all the shortcomings of the program.”The latest adjustment comes as the Social Security Administration faces internal challenges and uncertainty about the program’s long-term future. In July, Treasury Secretary Scott Bessent said the Republican administration was committed to protecting Social Security, hours after comments suggesting that a new children’s savings program signed by President Donald Trump was “a back door for privatising Social Security,” as quoted by AP.

The FTSE 100 hit another record peak on Friday fuelled by weaker-than-expected US inflation data, optimistic UK economic reports and strong results from NatWest.

The FTSE 100 index closed up 67.05 points, 0.7%, at 9,645.62, a new record close.

The FTSE 250 ended 167.61 points higher, 0.8%, at 22,529.02 and the AIM All-Share advanced 1.77 points, 0.2%, at 777.06.

For the week, the FTSE 100 rose 3.1%, the FTSE 250 advanced 3.4% and the AIM All-Share went up 0.7%.

In Europe on Friday, the CAC 40 in Paris ended flat, while the DAX 40 in Frankfurt closed up 0.1%.

Stocks in New York were sharply higher at the time of the London close. The Dow Jones Industrial Average was up 1.2%, the S&P 500 was 1.0% higher, and the Nasdaq Composite advanced 1.3%.

The yield on the US 10-year Treasury was quoted at 4.00%, unchanged from Thursday. The yield on the US 30-year Treasury stood at 4.58%, also flat from Thursday.

After a sluggish start, blue chips in London pushed ahead after US consumer price inflation accelerated at a slower pace than expected in September.

The delayed numbers from the Bureau of Labour Statistics showed the annual consumer price inflation rate was 3.0% in September, picking up speed from 2.9% in August.

But the reading was short of the FXStreet-cited consensus of 3.1%.

Core CPI, which excludes more volatile food and energy costs, rose 0.2% month-on-month, and 3.0% year-on-year. It had been expected to hold steady at August’s 3.1% level.

The figures were seen as giving the green light for the US Federal Reserve to lower rates at next week’s Federal Open Market Committee (FOMC) meeting. A quarter point cut is expected.

Analysts at Wells Fargo said: “Today’s softer-than-expected CPI data should lock the FOMC into a 25 (basis points) rate cut at its meeting next week. That said, today’s data were not so soft that the committee can sound the all clear on inflation.”

Economists think US inflation could remain “sticky” in 2026 due to the ongoing impact of tariffs and that this could have implications for future interest rate decisions.

Felix Schmidt, at Berenberg, thinks elevated inflation will make it difficult for the Fed to lower the key interest rate again beyond its October meeting.

In the UK, there was a welcome surprise from retail sales data which rose 0.5% in September, defying forecasts for a 0.2% fall.

Danni Hewson, AJ Bell head of financial analysis, said the figures should bring “cautious optimism” ahead of the sector’s most important shopping period, with Black Friday and Christmas looming.

Adding to the positive tone, flash PMI data showed business activity in the UK expanded at a faster pace in October, led by a rebound in manufacturing. The S&P Global flash composite output index climbed to 51.1 points, exceeding both the 50 no-change threshold and expectations for 50.6.

September’s reading had slipped to 50.1 points. The latest data showed the slowest pace of job cuts since May and the weakest input price inflation since November 2024.

In addition, consumer confidence increased marginally in October as shoppers look to Black Friday, despite nervousness around the upcoming Budget, figures showed.

GfK’s long-running consumer confidence index increased by two points, although it still languishes at minus 17.

The increase was largely driven by a four-point rise in the index’s major purchase marker, an indicator of confidence in buying big-ticket items, to minus 12, a nine-point improvement on last October.

The pound was quoted lower at 1.3301 dollars at the time of the London equity market close on Friday, compared to 1.3323 on Thursday.

The euro stood at 1.1631 dollars , up compared to 1.1609.

On the FTSE 100, it was nip-and-tuck between NatWest and London Stock Exchange Group for top billing, with the two swapping places as the trading day progressed.

Lender NatWest eventually won out, rising 4.9%, and hitting a 15-year high as the bank lifted its annual guidance and said profit in its third quarter jumped by around a third.

The Edinburgh-based lender reported third quarter pretax profit of £2.18 billion, a rise of 30% from £1.67 billion a year prior. Total income improved 16% to £4.33 billion from £3.74 billion.

London Stock Exchange Group took the silver medal, advancing 4.8%, after Thursday’s well-received trading update.

Elsewhere, the retail sales surprise and an upgrade helped do-it-yourself retailer Kingfisher, which rose 1.9%.

RBC Capital Markets raised the B&Q owner to “outperform” from “sector perform” on hopes that growth opportunities for Kingfisher in the UK and Poland, would provide upside to longer-term sales forecasts.

On the FTSE 250, WH Smith rose 4.2% as Peel Hunt upgraded to “buy” from “hold”, after being downgraded by Barclays on Thursday.

Next month, the Swindon-based company is expected to disclose findings into an investigation of its US business following an understatement of profit.

But Peel Hunt thinks even in a scenario that the US is worth “literally nothing”, the “shares are still worth owning” for its other divisions.

Brent oil traded at 66.56 dollars a barrel, up from 65.75 late Thursday. Gold traded at 4,125.47 dollars an ounce on Friday, down from 4,146.49 on Thursday.

The biggest risers on the FTSE 100 were NatWest Group, up 26.8 pence at 572.4p, London Stock Exchange Group, up 450.0p at 9,799.0p, Tesco, up 9.8p at 455.4p, Next, up 280.0p at 13,435.0p and Polar Capital Technology Trust, up 8.5p at 450.0p.

The biggest fallers on the FTSE 100 were GSK, down 26.5p at 1,620.0p, Airtel Africa, down 2.4p at 228.0p, Hikma Pharmaceuticals, down 17.0p at 1,753.0p, Diageo, down 15.0p at 1,811.0p and LondonMetric Property, down 1.6p at 196.9p.

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