LIVERPOOL, England (AP) — Britain’s Treasury chief warned Monday that wars in Ukraine and the Middle East and economic headwinds sparked by U.S. President Donald Trump’s tariffs have worsened the U.K.’s economic outlook since the governing Labour Party won power last year.
Chancellor of the Exchequer Rachel Reeves is under pressure to say whether she will raise taxes in her autumn budget on Nov. 26.
“In the last year the world has changed, and we are not immune to that change,” she told the BBC. “Whether it is wars in Europe and the Middle East, whether it is increased barriers to trade because of tariffs coming from the United States, whether it is the global cost of borrowing, we’re not immune to any of those things.”
Reeves hopes to deliver a touch of economic optimism when she addresses the Labour Party’s annual conference in Liverpool later on Monday.
Since ending 14 years of Conservative rule in July 2024, the Labour government has struggled to deliver the economic growth it promised. Inflation remains stubbornly high and the economic outlook subdued, frustrating efforts to repair tattered public services and ease the cost of living.
Labour pledged during last year’s election not to raise taxes on working people, but has since hiked levies on employers, and Reeves has not ruled out increasing other forms of tax in her budget.
“I’m determined not to increase those key taxes that working people pay,” Reeves said.
The Treasury said Reeves’ speech will include a pledge to end long-term youth unemployment, and kickstart the U.K.’s sluggish productivity. Under the plan, everyone under 25 who has been unemployed for 18 months will be offered guaranteed paid work. One in eight 16–24-year-olds in Britain — about 1 million people — is currently not in education, work, or training.
Thousands of Labour members from around the country are in Liverpool, in northwest England for the party conference – a mix of policy forum and pep rally that this year is lacking in pizazz.
Labour lags behind Nigel Farage ’s hard-right Reform UK party in opinion polls, and some party members are losing faith in Prime Minister Keir Starmer – even though there may be four years until the next election.
Many are rallying around Andy Burnham, the ambitious Labour mayor of Manchester, who said Sunday that the party is in “peril” and needs to change direction.
The threat posed by Reform is top issue among Labour delegates at the four-day conference that ends Wednesday. Farage’s party has only five lawmakers in the 650 seat House of Commons, and Labour has more than 400. Nonetheless, Starmer said Reform, and not the main opposition Conservatives, is now Labour’s chief opponent.
Starmer has described the fight between Labour and Reform as “a battle for the soul of this country.” On Sunday he accused Farage of sowing division with plans by Reform to deport immigrants who are in the U.K. legally. Starmer said such a policy would be “racist” and “immoral.”
The U.K. government has toughened its own language about immigration, though. Home Secretary Shabana Mahmood is expected to announce plans on Monday to raise the bar immigrants must meet to gain permanent residency. Under the proposals, people will have to have a “high standard” of English, “a spotless criminal record” and give back to their communities to get the right to settle in the U.K.
