Why Britain’s Budget Is a Failure

This is why The Economist thinks so.

UK Chancellor Says Ordinary People Will Pay 'A Little Bit More' as She Defends Budget | BBC News

Nov 26, 2025 | UK Chancellor Rachel Reeves - the minister in charge of the government's finances – has set out details of her second Budget since becoming chancellor.

Reeves said she is asking "ordinary people to pay a little bit more" after she announced tax rises of £26bn to come into force by 2030.

Setting out her Budget in the Commons earlier, she said that income tax thresholds would be frozen until 2031, while the two-child welfare cap would be scrapped.

A spokesman has said the chancellor has confidence in the head of the Office for Budget Responsibility, Richard Hughes, after the watchdog mistakenly published details of the Budget early.

Fraser Nelson: Rachel Reeves's Exit Would Topple Starmer

Jul 2, 2025 | “If Rachel Reeves does go, then it will be I think a matter of time before Keir Starmer goes with her.”

Losing a chancellor within 18 months of a new government would be “too big an admission of failure” from the PM, says The Times’s Fraser Nelson.

Reeves’s Shrinking Economy Already Has Its First Victims

THE TELEGRAPH: The demise of cars, flights and cafes are just the start of Britain’s slump towards full-blown recession

The car manufacturing giant Stellantis is closing a factory. EasyJet is slashing the number of flights around the UK. Even the chairman of Gail’s has said that some of his businesses may have to close. If you want to buy a new car or take a Christmas break, it is about to get a lot harder.

In reality, there is a common theme to all those stories: they are all part of Chancellor Rachel Reeves’s shrinking economy. And from retail chains to pubs and restaurant groups it is going to get a lot worse over the next few months.

For anyone who was expecting the UK to be emerging as the “fastest-growing economy in the G7” by now, as the Labour Party promised during the election campaign, it has turned into a sobering week. » | Matthew Lynn | Saturday, November 30, 2024

Borrowing Costs Surge as Markets Turn On Reeves

THE TELEGRAPH: Investors react to warnings that debt-fuelled Budget will raise interest rates and hurt growth

UK borrowing costs have hit their highest levels in a year and stocks have tumbled amid growing concerns about Rachel Reeves’s borrowing plans.

Benchmark 10-year borrowing costs rose by almost 0.2 percentage points to 4.582pc on Thursday, as investors fretted about the Chancellor’s £32bn-a-year increase in borrowing. Analysts have highlighted it would not all be used to fund investment.

The pound also fell by a third of a percent against the dollar to $1.2922 and stocks slumped. The FTSE 250 index, which is made up mainly of domestic companies, fell by 1.4pc and the more internationally focused FTSE 100 was down by 0.80pc in afternoon trade.

The sell-off for British assets and the higher government borrowing costs came as investors reacted to warnings from economists that the Chancellor’s debt-fuelled Budget will leave the country vulnerable to changes in debt costs, put up interest rates and hurt growth. » | Szu Ping Chan, Economics Editor | Thursday, October 31, 2024

Institute of Economic Affairs: Tax Expert Warns: The Budget's Hidden Attack on Your Wages

Oct 30, 2024 | In an analysis of the government's latest budget, Tom Clougherty, Executive Director and Tax Policy Specialist, breaks down the concerning implications of a massive £40 billion tax increase, with £25 billion coming from employer National Insurance contributions alone. With taxes already at historic highs, Clougherty explains how these changes will likely suppress wages and reduce job opportunities across the private sector.

Despite the change in government, Clougherty identifies a troubling continuity in economic policy, with an increasingly state-centric approach to growth. He critiques the administration's heavy reliance on public spending and capital projects, arguing this comes at the expense of private sector innovation and investment – the true engines of sustainable economic growth.

Drawing from years of economic evidence, Clougherty challenges the government's claim that workers won't be affected by these tax increases. He demonstrates how employer National Insurance hikes inevitably get passed through to employees in the form of lower wages and reduced benefits, adding to existing cost of living pressures. This comprehensive analysis offers vital insights for businesses and workers alike as they navigate the implications of the new budget.

Rachel Reeves Considers Raising Capital Gains Tax to 39%

THE GUARDIAN: Exclusive: Rates of 33% to 39% being tested as Treasury source says tax-raising plans are in ‘complete disarray’

Rachel Reeves is considering raising capital gains tax as high as 39% in the budget, the Guardian can reveal, amid a scramble to raise funds for crumbling public services.

Treasury modelling being reviewed by the chancellor and seen by this newspaper shows officials are testing a range of 33% to 39% for capital gains tax (CGT). The wealth tax is paid by about 350,000 people and is levied on the sale of assets including second homes and shares but at significantly lower rates than wages.

Whitehall sources say there is growing concern about the limited options for tax rises to fill a hole the Institute for Fiscal Studies (IFS) thinktank says is as big as £25bn, ahead of the budget on 30 October.

“Some very big tax decisions are being left until very late in the day,” one senior source claimed. Another said the Treasury’s tax-raising plans were in “complete disarray”. » | Anna Isaac | Thursday, October 10, 2024

Reeves to Press Ahead with Plans to Borrow Billions for Investment

THE GUARDIAN: Exclusive: Chancellor’s plan to change rules to allow more borrowing comes as cost of government debt rises

Rachel Reeves is pushing ahead with plans to borrow billions of pounds extra for infrastructure investment, the Guardian has learned, despite concerns about the rising cost of UK government debt.

The chancellor told the cabinet on Tuesday she wanted to change how the Treasury accounted for capital spending to reflect its benefits, as allies say she intends to finalise her debt rule in the coming days.

The move, which will be confirmed to the Office for Budget Responsibility (OBR) as soon as Wednesday, will allow the government to borrow tens of billions more for capital spending over the course of this parliament.

Whitehall sources say she is committed to the plan despite a recent rise in the government’s borrowing costs, which some market experts have blamed on the prospect of higher debt but which others say is more connected to the US economy. » | Kiran Stacey, Political correspondent | Tuesday, October 8, 2024