UPDATE: As the UK braces for Chancellor Rachel Reeves’ highly anticipated Autumn Budget on November 26, 2025, speculation mounts over its potential impact on the stock market. With economic growth faltering and high government spending, investors are on edge about possible tax increases and their implications for various sectors.
The Autumn Budget is expected to outline how the government intends to raise funds and where it plans to allocate spending. Analysts are concerned that if taxes rise, sectors heavily reliant on domestic consumers, such as retail, could see significant downturns.
In a recent analysis, AI platform ChatGPT assessed the upcoming budget’s effects. The AI suggested that the budget is “unlikely to crash the market” due to the FTSE 100 companies generating approximately 75% of their revenue from international sources, thus making them less vulnerable to domestic policies. However, it cautioned that FTSE 250 stocks, which are more domestically focused, could experience declines, particularly if household taxes increase.
ChatGPT indicated that any adjustments to capital gains tax, higher dividend taxes, or changes to ISA benefits could severely dampen retail investor confidence. Additionally, the banking sector may face higher levies, which could curtail lending and stifle economic growth. Notably, the Financial Times recently reported that banks are likely to be spared from additional taxes in this budget, a move that could ease pressure on lending institutions.
Despite potential challenges, certain sectors might see growth opportunities. Stocks related to government initiatives, such as Darktrace, a cybersecurity firm, could benefit. However, it’s important to note that Darktrace was taken private in 2024, highlighting the need for caution when interpreting AI-generated insights.
Another stock to watch is Legal & General (LSE:LGEN), which is closely linked to the bond market. Following the disastrous mini-budget in 2022, Legal & General’s shares plummeted by 15% in a week. Currently, the company boasts the highest dividend yield in the FTSE 100 at 8.9%, with a forward yield potentially reaching 9.2%. A sharp price drop could push this yield toward 10%, making it an attractive buy for investors seeking solid income.
Market analysts advise keeping a close eye on the budget’s reception, especially concerning government bonds. If the market reacts negatively, it could trigger a sell-off, impacting stocks like Legal & General.
As the countdown to the Autumn Budget continues, investors are urged to prepare for potential volatility. The outcome of this budget could shape economic policy and market dynamics in the UK for the foreseeable future.
Stay tuned for more updates as developments unfold in the lead-up to this critical financial event.
