Rachel Reeves has pushed this year’s Budget to the latest possible slot: 26 November. She clearly doesn’t want to face the music and frankly, who can blame her? It’s shaping up to be the ultimate nightmare before Christmas.
The rest of us are dreading it too. Critics are willing her to fail, but I’m not among them. I’d rather Britain’s first female chancellor lived up to her billing by “fixing the foundations” and getting the country growing again.
Instead, she’s hiked taxes, driven up spending, strangled growth, piled on debt, set a bomb under borrowing costs and destroyed jobs and businesses. Last year’s Budget was a calamity. This one will be worse. Britain cannot afford it.
She’s already repeating the same costly mistakes. Straight after winning last July’s election, Reeves and Starmer warned voters of the tough Budget to come in October.
That gave businesses and households four long months to panic. Investment froze and spending dried up as speculation built into a frenzy.
Now she’s done it again.
Experts warn that Brits face an “autumn of anxiety”. We’ve already endured two months of nervous waiting and there are nearly three more to go. That’s almost 13 weeks of paralysis while the country waits to see how Reeves will tax the living daylights out of us.
The waiting is killing us. Billions have been wiped off the value of Britain’s banks as investors brace for a tax raid. More than half of firms are delaying investment, Barclays research shows.
Homebuyers and landlords are in limbo, awaiting fresh property taxes, consigning the housing market to a deep freeze. Bond investors are demanding ever higher yields to buy gilts, threating a sterling crisis.
Reeves’s self-regarding Budget “mastermind” Torsten Bell now has more time to decide how many of his list of 20 tax hikes he can implement.
When Reeves finally delivered last year’s Budget, the impact was worse than feared. Inflation has rocketed, from 1.7% less September, the month before the budget, to 3.8% this July. It’s now forecast to hit 4%.
Much of that’s down to Reeves’s daft decision to hike employers’ national insurance by £25billion. Businesses passed the extra cost straight to customers by hiking prices.
As inflation rebounded, borrowing costs followed, pushing gilt yields higher and adding billions more to the Treasury’s debt bill.
Unemployment has jumped from 4.3% to 4.7% since last year’s Budget, as hard-pressed businesses fold or axe staff. Soon it could hit 5%.
With more people out of work, fewer pay tax and the welfare bill climbs still higher. Reeves claims growth is her number one priority, but she’s destroyed it. GDP fell in April and May before scraping a partial rebound in June.
Last autumn Reeves raised taxes by £40billion. This year could add another £25billion, possibly £40billion more. That risks locking the UK into a doom loop of higher taxes, weaker growth, falling revenues and ever-greater borrowing. It could even trigger a gilt and festive fiscal crisis.
If only we could scrap the whole thing. But we can’t. Reeves has no choice but to deliver her fiscal medicine. And we have no choice but to take it.
