Rarely has there been so much speculation about the contents of the famous red Budget briefcase, brandished for the first time in Downing Street by a female Chancellor of the Exchequer.

Not much has been confirmed, but the big picture has become clearer.

Rachel Reeves narrative starts with a £22 billion drift this financial year. In terms of scale, this is equivalent to the entire devolved public sector wage bill in Scotland in 2021-22, with a workforce last June of 547,000 workers across health, education, police, local government, etc.

The budget mainly concerns the next financial year, starting in April 2025. For this, Labor says public services require a £40 billion increase in tax and spending.

Such claims are disputed. The Office for Budget Responsibility, while also marking Rachel Reeves’ duties on next year’s budget, is verifying her claims for this fiscal year, and both reports will be released alongside the budget.

During its election campaign, the Labor Party opted for strict constraints: no changes to income tax, social security (at least for employees) or VAT. So while tax increases seem inevitable, all but one will come from smaller sources of income.

The biggest tax bite will likely come from employers, who are expected to face a increase contributions they are required to do so with National Insurance.

While employees have had their interest rates cut from 12% to 8% thanks to two freebies from Tory chancellors, employers continue to pay 13.8% of wages to the Treasury.

This amount is expected to increase, thereby compensating the Treasury for tax relief granted to employees.

There are two major issues: first, to what extent can the jobs tax contribute to economic growth, one of Rachel Reeves’ top priorities?

And how will employers respond: by investing in technology that could replace jobs, by raising prices for customers, or by cutting wages? Some economists believe that wages will suffer the most.

The sectors most affected are those that rely the most on workers, such as hospitality, and particularly in small businesses.

The other big question: will public services be compensated for this increase in social charges?

Scotland has a significantly higher share of public sector employees than it receives in Treasury pay: 22.1% of workers, compared to 17.3% for the UK as a whole. The squeeze could therefore be felt more heavily on public service budgets in Scotland.

Little change is expected on income tax, so the existing systems of Westminster and Holyrood will continue to be as divergent, at least until the Holyrood budget is decided. The same goes for transaction taxes when purchasing a property.

Some other taxes which have been the subject of speculation bring in less money per capita in Scotland because there is less wealth. Capital gains tax, inheritance tax and pension tax relief are not vested in Holyrood and would apply in Scotland.

A change to fuel taxes would affect the whole of the UK, and changes to tax breaks for the oil and gas industry would apply across the UK, but would have the greatest impact on the Scottish industry .

This is one of the biggest problems in this budget for the Scottish economy: a sudden end to investment allocations would also curb investment, the industry claims, thereby accelerating the long-term decline of the industry, costing jobs and increasing dependence on imported energy.

The industry has lobbied to prevent this from happening.

A victim of the budget already confirmed There is a flat rate increase in England on most bus routes, from £2 to £3.

In Scotland, grants are paid to bus companies to provide free travel to people aged under 21 and over 60.

The reduction in grants to bus operators will be reflected in the funding formula for the Treasury block grant to Holyrood.

If there are changes to the budgets of Whitehall departments for which powers are devolved – such as transport, justice, health and education – Scotland receives a fixed share of these changes.

Changes could be made to benefits for people unable to work due to long-term illness. Labor inherited from the Conservatives the fear that these benefit claims are increasing at an unsustainable rate.

Such changes to Universal Credit and statutory sick pay would apply across the UK, while the Scottish Government has devolved power over disability benefits. This could be used to soften the impact of changes made by Westminster – at some cost.

Additional measures have already been confirmed for building schools and social housing in England, with prisons set to receive more, while the NHS is set to get a funding increase.

Such budget increases would impact Holyrood’s block grant, and MSPs are free to decide where they are allocated.

Budget increases are expected to mainly concern capital spending – for buildings, infrastructure and public investment in key industries. That’s because Rachel Reeves is changing the rules that constrain her, to allow more borrowing for investment purposes.

However, it also adopted a rule that daily expenses needed to run public services must come from taxes, not borrowing. This is where the greatest harm will be felt in this budget.

And while it may be tempting, Holyrood cannot simply transfer the Treasury’s capital budget allocation into the day-to-day budget.

However, he could get the private sector to build roadsfor example, and re-rent them on behalf of the public, using the daily budget.

Labor ministers are under pressure, through opinion polls and surveys of business confidence or lack thereof, to tell a more positive story about the economy.

So expect Rachel Reeves to talk about the growth prospects of booming industries such as renewable energy and biosciences.

Some expect chancellors, like magicians, to “pull a rabbit out of a hat”. The thing is, it’s supposed to be a nice surprise. One of these possibilities would be to remove the limit of two children for family allowances. Although it would be expensive, retaining it is very uncomfortable for Labor MPs.

The Chancellor can decide to increase the legal minimum wage.

There is already a “national living wage”, recently increased by Tory chancellors. Don’t be surprised if Labor rebrands the party as the ‘new living wage’.

But higher wages for some mean higher costs for employers, while they already face higher national insurance contributions. And that includes parts of government.

There will be no easy and free decisions in this budget.

Immediately after the 12:30 budget speech, as Conservative leader Rishi Sunak responds with his (likely) final speech from the Commons bench, the Office for Budget Responsibility publishes its assessment of the effects on the economy.

Other experts, notably those from the Institute for Fiscal Studies, will calculate the winners and losers of this budget, in terms of taxes and benefits.

The Budget tells the Scottish Government how much it can expect to receive in block grant funding for 2025-26. Shona Robison, Holyrood’s finance secretary, has until her budget statement on December 4 to distribute this sum and consider other sources of revenue, including Scottish income tax.

She must produce a budget at Holyrood that can secure the support of an opposition party by February 2025. If she fails to do so, could be a snap election.