A summer of uncertainty will be followed by an autumn of anxiety as the country waits for Rachel Reeves’s November 26 Budget. The Chancellor is under fire for setting the date so late, with families, employers and investors facing weeks of wondering where tax hikes and cuts may fall.
Her Conservative opposite number, Sir Mel Stride, accused her of “stalling” in the “vain hope things might get better”. She faces a challenge which would daunt even the most confident of her predecessors.
Experts have warned of a hole of around £50billion in the public finances and speculation is rife about potential tax raids and stealth taxes. This comes in the same week market jitters pushed borrowing costs to a 27-year high.
Anxiety is especially acute because the Chancellor has form when it comes to unveiling shocking cuts and tax rises. Pensioners will not forget the day she scrapped universal entitlement to winter fuel payments; farmers are still incensed at the inheritance tax raid; and employers now live with the consequences of her hike in National Insurance Contributions.
Each group was blindsided by these announcements. Across the country, in boardrooms and across kitchen tables, Britons will ask: “Where will she strike next?”
The great danger is businesses and families alike stop spending as confidence evaporates and growth vanishes. Ms Reeves does not pretend the country is abuzz with a feel-good factor; instead, she admits the economy is “not working well enough” – although she insists it “isn’t broken”.
Every word she utters in the coming weeks and months will be studied for signals whether a land tax or pension changes are on the cards. But her ultimate goal will be avoiding the turmoil which brought the curtain down on the Liz Truss era and saw mortgage costs spiral.
When the likes of former Tory Chancellor Ken Clarke warn Britain is “much nearer to the risk of a financial crisis than the Government is remotely acknowledging”, the present market anxiety could spiral into something far worse.
If inflation and unemployment climb while growth dies, voters will long for change in Downing Street.
