Commercial Awareness Digest - 28th November 2025

Reeves' 2025 Budget and its Implications

By Esme Glover

The eagerly awaited 2025 Budget, delivered by UK Chancellor Rachel Reeves this week, has sparked significant discussion about its terms and areas of focus. From raising taxes by £26 billion, to welfare state changes and imposing an allowance cut on the Cash ISA (Individual Savings Account) for those under 65, the budget appears to tackle various areas of people’s lives.

Tax has been an area of focus for Reeves as she states that she aims to close the “black hole” in public finances. The Chancellor confirmed that income tax and national insurance thresholds, the amount you can earn before paying tax or falling into a specific tax bracket, will remain frozen until April 2031, extending the previous freeze from April 2028. Although headline tax rates will remain unchanged, the result of this prolonged freeze will mean more individuals move into higher tax brackets due to fiscal drag. More specifically, fiscal drag results from inflation increasing people's earnings over time without real income gain. This phenomenon has been increasingly shaping the UK’s tax system as it has been a consistent strategy used by UK Chancellors. Furthermore, council and property tax will increase by 2 percentage points across

the board, with a “mansion tax” being introduced on properties worth more than £2 million. Analysts predict that these tax changes will hit those who earn approximately £50,000 a year the most.

For the legal sector, these changes have clear implications. The increased complexity of the tax system is likely to drive demand for advice from law firms’ specialist tax teams, who already play a critical role in transactions and contentious matters. Firms with private client or real estate teams may also see an influx of advisory work in these areas as high-net-worth individuals and businesses seek guidance on their private wealth and real estate matters respectively.

Beyond tax, Reeves introduced one of the most politically significant measures which is the abolishment of the two-child benefit cap. The cap has been highly criticised for its impact on exacerbating child poverty and its removal is projected to lift approximately 450,000 children out of poverty. However, the policy carries an estimated cost of approximately £3.5 billion and has drawn Conservative criticism as the wider population will be paying increased taxes as a result. To gain perspective on what the rest of the UK thinks about this, a recent YouGov poll suggested that 57% of British adults wished to maintain the cap, illustrating the difficult balance the government faces between social concerns and overall tax burden.

These terms specifically underscore the inextricable connection between economic policy and social outcomes, as well as the political difficulty of satisfying the entirety of the British public. As the Budget begins to take effect, analysts will continue to assess whether the government’s approach will strengthen economic growth, or whether these tax increases will perpetuate a decrease in consumer spending.

Private Credit Oversight: The Jefferies-First Brands Example

By Zuha Malik

US regulators are now examining whether Jefferies, a major global investment bank, properly disclosed the risks linked to its long-standing involvement with First Brands Group, an auto-parts manufacturer that collapsed in September with roughly $12 billion in debt. The investigation centres on whether investors in Jefferies’ specialist fund, Point Bonita Capital, fully understood that many of the “receivables” they were exposed to were ultimately dependent on First Brands rather than on large retailers such as Walmart and O’Reilly, as originally understood.

To understand why this matters, it helps to break down Jefferies’ role - Jefferies is a full-service investment bank, meaning it does far more than advise companies. In this case, it was simultaneously advising First Brands, lending to First Brands through invoice-financing arrangements and also managing an investment fund that bought assets linked to First Brands’ customer invoices. When a single bank provides multiple services to the same client, it raises the possibility of conflicts of interest and makes clear, accurate disclosure even more important (which is what the US Securities and Exchange Commission is now reviewing).

The other key part of the story is First Brands’ financial structure. With about $12 billion in liabilities, the company was highly leveraged. A business carrying that level of debt must use a significant portion of its cash flow just to meet interest payments. If performance weakens or cash movements are not as transparent as they seem, problems escalate quickly. First Brands’ bankruptcy filings later revealed that invoice lenders (including Jefferies) were being repaid directly by First Brands, rather than by customers like Walmart. This meant the underlying credit risk was far more concentrated in the company itself than investors may have realised.

The environment that allowed this to happen is also important. After years of low interest rates, investors have sought “higher-yielding” alternatives to traditional bonds. This has fuelled rapid growth in private credit, including receivables-based lending. These instruments can offer attractive returns, but they are also less transparent, meaning investors rely heavily on what banks tell them about the underlying risk. If disclosure is incomplete, problems can spread quickly across the financial system - as this case shows!

For UK law firms, the Jefferies-First Brands case reflects the concerns the FCA raised in its July 2025 speech on private markets. Sarah Pritchard noted that parts of the private-assets world still “sit in the shadows”, with limited transparency over valuations and how conflicts are managed. As the FCA moves toward outcomes-focused regulation (judging firms by whether investors actually understand the risks) lawyers advising banks and private-credit funds must ensure that their client disclosures, conflict-management systems and also fund documents are robust enough for this new environment.