Budget watch: OECD growth slows as analysts flag wealth-based tax drive

Budget Day on November 26 looms as the government weighs measures that could affect households' wealth and assets. With the economy cooling, officials face pressure to close a multibillion-pound hole in public finances, and forecasters say the main lever will likely involve taxes on households and assets rather than broad business concessions.

The Organisation for Economic Cooperation and Development projects UK growth at 1.4% this year and 1% next year, a slowdown analysts attribute in part to Labour's planned £25 billion National Insurance changes on businesses. With growth lagging, observers say it would be unlikely for the chancellor to rely on another round of business taxation alone, increasing the focus on measures that hit household wealth instead.

In its Budget planning work, the Resolution Foundation has floated ideas to raise additional revenue largely through households rather than firms. The group highlights options such as applying National Insurance to employer pension contributions and curbing salary sacrifice schemes. It also flags a potential 2p-in-the-pound increase across all income tax bands, offset by a reduction in the NI rate. Other measures include higher dividend taxes for basic-rate taxpayers and a continued freeze on personal tax thresholds into 2028 and 2029. Taken together, the proposals would shift the burden toward households and unearned income during a period of elevated inflation.

Observers note that the Foundation's recommendations are frequently discussed in policy circles tied to Labour, and the group's acknowledgments in its reports reference Treasury officials, suggesting their ideas carry weight in the Budget debate. If enacted, the changes could be especially burdensome for pensioners and savers, given inflation is expected to average about 3.5% this year.

With Budget Day approaching, analysts and markets will scrutinize whether policymakers choose a broad wealth-tax approach or a more targeted set of reforms designed to protect growth. The coming weeks are likely to reveal how much room there is for compromise between economic prudence and the fiscal pressures described by economists.

Until then, the key question for households and investors remains: what size of tax hit should be anticipated, and which assets will be most affected? As November 26 nears, observers caution that the path the government chooses will shape consumer behavior, business investment and the trajectory of the UK economy in the year ahead.