The upcoming budget, presented by Chancellor Rachel Reeves, has been characterized by internal chaos and external scrutiny, drawing comparisons to previous high-stakes moments in UK budget history. Instances such as Gordon Brown’s 2007 abolition of the 10p tax rate and Kwasi Kwarteng’s 2022 mini-budget, which led to adverse political fallout, highlight that budgets can significantly influence governance.
Despite internal claims that Reeves maintains a calm and methodical approach, external perceptions indicate disarray as various policies have been proposed and then withdrawn in the lead-up to the budget announcement. Recent developments included a reversal on a planned income tax rate increase, which would have marked the first rise in the basic rate since 1975. This change shifted the focus to smaller revenue-raising measures, like extending the freeze on income tax thresholds.
The decision to abandon the tax rise has raised concerns among bond markets, with investors reacting negatively due to perceived uncertainty over the government’s commitment to fiscal responsibility. Allies of Reeves have indicated that this revision was influenced by improved wage growth forecasts. However, skepticism persists regarding the validity of this rationale, with some insiders suggesting the reversal stemmed from political factors rather than economic forecasts.
As ministers juggle options to fill fiscal gaps while addressing political pressures, uncertainty among Labour MPs grows. Many are concerned that failure to adhere to manifesto promises might lead to a loss of public support, particularly as local elections approach. The potential implications of this budget extend beyond individual politicians; financial experts suggest that its outcome could influence the broader viability of center-ground governments in addressing the UK’s economic challenges.
Overall, this budget is positioned as a crucial test of both Reeves’s leadership and the government’s ability to navigate complex economic landscapes without losing voter confidence.
Source: https://www.theguardian.com/uk-news/ng-interactive/2025/nov/22/a-make-or-break-budget-inside-the-treasury-rachel-reeves