Rachel Reeves’ Budget landed with a soft thud. Not a disaster, not a triumph, just… meh. Solid, middle-of-the-road, designed not to frighten the horses.
But if the purpose was to shift perceptions of Labour or the broader economic mood, it hasn’t. No hearts have soared and no dials have moved.
That raises a bigger question: is meaningful economic reform possible in a country this politically febrile? When the public is this discontented with mainstream politicians, does any government actually have the space or courage to do the difficult things?
Ahead of the Budget, a report by Dods Political Intelligence argued that the Government’s fiscal framework had become self-defeating. Headroom is repeatedly wiped out and tax uncertainty — the very thing that undermines business confidence — becomes baked into the system.
The Truss episode hasn’t merely scarred the political class; it has paralysed it. We’ve replaced recklessness with timidity
Dods’ conclusion was blunt: the Government faces an unavoidable choice. Build a larger fiscal buffer by raising revenue now, or stay trapped in a grim cycle of uncertainty and firefighting. Clarity mattered more than any individual measure.
So did Reeves break the cycle? On paper, maybe. Markets behaved. A bit of headroom was built. As Hetal Mehta of St James’s Place put it, Reeves seems to have pulled off “the necessary balancing act”.
Taxes rose, spending rose and the overall fiscal tightening was modest. The growth downgrades looked more realistic. And a shift to assessing fiscal rules only once a year should, in theory, calm the short-term political weather.
If the goal was simply “Don’t do a Liz Truss”, then mission accomplished.
But maybe that’s the problem. The Truss episode hasn’t merely scarred the political class; it has paralysed it. We’ve replaced recklessness with timidity.
Breaking a manifesto commitment is not, in itself, political suicide; voters barely remember most of them
As Phil Wickenden wrote yesterday, the Budget is “death by 1,000 tweaks, not one big speech-friendly blow”. Instead of a bold strike, we get piddling around the edges: tweaks, freezes, surcharges, little lifestyle taxes that raise little but irritate everyone.
The farcically leaked OBR document suggests there’s a good chance Reeves will have to come back for more anyway. Growth projections remain lacklustre, and those numbers will define Labour’s re-election prospects more than any clever packaging of “stability”.
Take income tax, which Reeves threatened to target before jumping away like a scalded cat.
The basic rate hasn’t budged for years. It’s easy to collect, universally understood and hard to avoid. Yet we choose to fiddle around with smaller, more distortive taxes that are costlier to administer and easier to dodge.
Keir Starmer campaigned on “country before party”, but the logic seems stuck in reverse. Breaking a manifesto commitment is not, in itself, political suicide; voters barely remember most of them. Defending the wrong commitment, on the other hand, is deeply counterproductive.
Brexit has reduced UK GDP by 6–8%, investment by 12–18%, employment by 3–4% and productivity by 3–4%
And then there’s the growth question. If this Budget was meant to shout “Britain is open for business”, I must have missed it.
Minimum and living wages have gone up. Dividend taxes have gone up. Even taxes on VCT dividends have risen — not exactly the signal of a government desperate to funnel capital into smaller British companies.
To be fair, governing present-day Britain would test anyone. The country is still living with the consequences of the 2008 financial crisis and the expenses scandal: the twin moments when public trust in politicians and institutions cracked.
The people at the centre of that meltdown largely walked away, leaving ordinary households to pay the bill. The anger that followed fuelled Brexit, which in turn deepened the very problems it was meant to solve.
From 1979 to 2007, Britain had three prime ministers. Since 2015, we’ve had six, including three in one manic year
A new report from the National Bureau of Economic Research reveals that our exit from the EU has reduced UK GDP by 6–8%, investment by 12–18%, employment by 3–4% and productivity by 3–4%. Higher prices, lower wages, weaker growth — all self-inflicted.
Layer on Covid, the fiscal aftershocks of the Ukrainian war and Donald Trump’s ‘drinking from a fire hose’ approach to global trade, and it’s no wonder the country feels permanently winded.
Then consider the political churn. From 1979 to 2007, Britain had three prime ministers. Since 2015, we’ve had six, including three in one manic year.
Polling has ricocheted wildly: at different moments since the referendum, the public has been ready to hand the keys to Theresa May, Jeremy Corbyn, Boris Johnson, Keir Starmer, and now Nigel Farage.
No political system, proportional or otherwise, can comfortably absorb mood swings this violent.
Politics is about who can speak to the public mood, or at least avoid being run over by it
In calmer times, Reform UK wouldn’t get a look in. But these aren’t calm times. A chunk of the electorate so tired of being told to wait for growth, wait for competence, wait for something — anything — to improve, that it will cheer almost any figure who says, “I hear you, and I’m prepared to rip something up.”
Does Keir Starmer deserve to be the most unpopular prime minister on record? Probably not. But politics is rarely about who “deserves” what. It’s about who can speak to the public mood, or at least avoid being run over by it.
Reeves’ Budget may prove economically sensible. It may even lay the groundwork for something steadier. But the deeper challenge for this government — and for any government — is that steady management increasingly looks like complacency.
