Setting the Scene
Chancellor Rachel Reeves delivered her second Autumn Budget on 26 November 2025, setting out £26 billion in tax measures designed to restore fiscal stability while the government pursues its “growth” agenda. The announcement has come during a period of significant momentum in UK-Saudi relations, centred on upcoming trade deals and ministerial led delegations. In October, Reeves led the largest-ever UK delegation to the Future Investment Initiative in Riyadh, securing £6.4 billion in two-way trade and investment commitments. This followed the UK-Saudi Great Futures Summit in London, which generated over £4.1 billion in deals and created more than 4,100 UK jobs. Total bilateral trade and investment has now exceeded £10 billion in under 18 months, and with major UK firms such as Barclays entering Saudi Arabia through KAFD, the future is strong for UK-Saudi trade.
However, the Budget arrives against a backdrop of global uncertainty. The Office for Budget Responsibility notes significant concerns about the future direction of US trade policy, with weighted average US tariff rates now at around 19 percentage points, around 16 percentage points higher than at the end of 2024. Global trade growth is expected to slow from 3.7% in 2024 to 2.3% in 2026 and for the UK, the OBR has revised medium-term productivity growth downward by 0.3 percentage points to 1.0%, which in isolation reduces expected government revenue by approximately £16 billion by 2029-30.
Despite these headwinds, UK GDP growth for 2025 has been upgraded to 1.5%, up from 1% forecast in March. Business investment has grown 2.7% in real terms during 2025, outperforming earlier expectations, and meaning that the UK is on course to be the second-fastest growing economy among G7 countries this year. The Bank of England has cut interest rates five times, and the government has struck trade deals with the US, India, and the EU. The India agreement alone is expected to increase GDP by over 0.1% in the long term.
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