LONDON — U.K. Finance Minister Rachel Reeves will deliver the government’s hotly awaited debut budget on Wednesday, putting to bed weeks of uncertainty over potential tax hikes and spending cuts.

The fiscal announcement — Labour’s first in almost 15 years — has been the source of much speculation, with Prime Minister Keir Starmer warning of “painful” decisions as his administration seeks to square what it says is a “black hole” in the public finances with its wider pro-growth agenda.

Reeves brought some clarity to that narrative on Thursday, by confirming that she would use her budget to announce a widely anticipated change to the U.K.’s debt rules in a bid to free up billions of pounds for investment. However, she did not specify exactly what the investment rule would change.

“We will measure debt differently. But, of course, we will put guardrails in place,” Reeves told Sky News Thursday, following her initial announcement in the Financial Times.

Reports suggest that the Treasury could target public sector net financial liabilities (PSNFL) in the U.K.’s measure of debt, rather than public sector net debt. The PSNFL measure takes in a wider account of the government’s balance sheet, including financial assets and liabilities, than public sector net debt. The Treasury declined to comment on the proposals.

In a note Friday, Goldman Sachs estimated that the changes could increase the government’s fiscal headroom by around £50 billion ($65 billion). Still, Goldman Sachs noted that the Treasury was unlikely to use all of that added leeway, and that any increase would be phased in gradually “over several years.”

“We think that the Chancellor would be very unlikely to use all the resulting fiscal space and would instead leave a much larger margin of headroom against the debt rule,” Goldman sachs said in the note.

As such, Reeves is still expected to rely heavily on a raft of tax changes to fill what she has described as a £100 billion spending gap ($129.6 billion) over the next five years. Here’s a look at what might change.

What changes to expect

Labour has repeatedly ruled out increases to income tax, National Insurance social security payments, value-added tax (a sales levy) and corporation tax, insisting it would not renege on pledges outlined in its election manifesto.

More recently, however, the government has shifted its narrative to avoiding tax rises for “working people,” suggesting that changes for higher earners and employers could be on the table.

Starmer fanned speculation last week when he said in an interview with Sky News that people who own shares would not fall within his “definition” of working people. The Treasury later clarified that it was possible for a working person to have a small amount of shares.

The government has also failed to rule out potential changes to National Insurance tax on employers’ pension contributions, which would see business owners pay more to employ workers.

Reports suggest that Reeves could extend the freeze on personal income tax thresholds introduced by the former Conservative government. While the policy does not raise headline income tax rates, it is often dubbed a “stealth tax” as it ultimately drags workers into paying more tax as pay rises tip them into higher tax brackets.

Elsewhere, changes to inheritance tax (IHT) and capital gains tax (CGT) remain on the table as the government seeks to reduce wealth imbalances across the country. That comes even as plans to introduce new levies on Britain’s “non-doms” could be watered down amid concerns it would fail to raise revenues and instead spark a wealth exodus.

Analysts have expressed mixed views over the expected measures, noting that Reeves has a fine line to tread in balancing the books. Goldman Sachs estimated in its Friday note that the government could need to raise £25 billion annually to meet its spending targets.

“Our broad message is that Chancellor Reeves will attempt to navigate a tight set of public finances to meet her dual aims of avoiding material real term cuts in non-protected spending and to raise public investment. Tax increases will be needed to help achieve these,” Investec said in a note Thursday.

Duncan Edwards, CEO of BritishAmerican Business, warned the government against going too far with measures that could harm business.

“Raising taxes, making it more expensive to do business here, penalizing investment through raising capital gains tax and so on, looks like a strange approach to delivering that growth agenda,” Edwards told CNBC’s “Squawk Box Europe” on Friday.

UK market jitters

Reeves has faced criticism for not holding the budget closer to Labour’s July 4 election, with critics saying the delay has cast a cloud of uncertainty over the economy and businesses.

Consumer confidence fell in October to its lowest level since March, when former chancellor Jeremy Hunt delivered his last budget, the fresh GfK showed Friday. Business confidence also slipped to an 11-month low this month, S&P Global flash figures indicated Thursday.

Meanwhile, government borrowing costs have risen sharply as memories of former-Prime Minister Liz Truss’s catastrophic September 2022 “mini-budget” remain close to mind. U.K. bond yields climbed following Reeves’ debt rule announcement Thursday, with 10-year gilt yields hovering near a 16-week high at 4.24%. Still, analysts ruled out the possibility of a similar market meltdown.

“Is this going to be a Liz Truss moment? We don’t think so whatsoever,” Andrzej Szczepaniak, vice president of European economics at Nomura, told CNBC’s “Street Signs” on Friday.

“Actually, now the government can carve out investment,” he continued. “That’s actually fairly positive for the U.K. economy. It has a long structural underinvestment situation versus its peers in the G7.”

Such increases to infrastructure investment have been recommended by the International Monetary Fund, which on Thursday raised its growth outlook for the U.K. It now expects the economy to expand 1.1% in 2024, up from its earlier estimate of 0.7%.

“This level of endorsement to these changes will have helped contain bond market reaction and avoid a big strop-out,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, wrote in a note Friday.

— CNBC’s Sam Meredith contributed to this report.