Rachel Reeves wants to achieve these five things with her Budget – it won’t be easy
WWhen Rachel Reeves entered the Treasury as the new chancellor on July 5, 2024, she came with “mission number one” to deliver economic growth.
Without this, he said, the UK would not be able to pay for the improved public services Labor wanted to deliver.
But 18 months later, hopes for economic growth in a stagnating economy have been shattered; The Office for Budget Responsibility (OBR) is expected to cut its already low growth forecasts to 2029.
Ms Reeves abandoned the language of economic growth as she stood up at 12.30pm on Wednesday and prepared to announce her second budget. The word “growth” wasn’t even on his lips when he spoke to Labor MPs on Monday evening – in a bid to rally them ahead of his Budget.
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Instead, with the Labor vote below 20 per cent, Nigel Farage’s Reform threatening to take power at the next election and turmoil in Labor seats, Ms Reeves’s political priorities on the Budget appear to have shifted.
Here are his top five goals:
Protect his job
Incredibly, it has come to this point.
In recent days, Ms Reeves, the UK’s first female chancellor, accused her critics of “manly explaining” how to be a chancellor; He says this motivates him to show that he’s making the right decisions.
But the problem is that he is not very popular with the public (-52 percent, according to the More In Common poll released on Monday). The outrage that some of his decisions have provoked among backbenchers has also raised serious questions about his future as chancellor.
If Keir Starmer is to save his own premiership, Ms Reeves herself could easily be sacrificed as the number of political allies to defend her dwindles.
Amid dire economic conditions, Ms. Reeves needs to show that she is in control and present a narrative that can unite her party and secure its future.
Fill the financial black hole
The Chancellor has made a series of unsuccessful attempts to reduce public spending and shrink the black hole in the public finances.
This included trying to cut welfare by £5bn a year; this idea was abandoned after Labor backtracked. It was also forced to make a U-turn on winter fuel payments, spending another £1bn a year.
Now it looks like he will need to come up with even more to lift the two-child benefit cap, with £3.5bn to go.
The black hole in spending plans has been pegged at at least £20bn; It means a chancellor who once said he wanted to cut taxes is ready to replace big tax rises for the second year in a row.
Save the UK from further Trump madness
Throughout a strangely long run into this Budget – including leaks, briefings and even U-turns on leaks and briefings – Ms Reeves has been consistent on one thing: the need to provide a greater safety cushion (technically called fiscal headroom) to deal with financial shocks.
It earned him less than £10bn last year, which was wiped out as Donald Trump’s tariffs caused chaos in the global economy.
Wars and other unforeseen disasters can easily throw the UK off track in terms of spending plans, and the Chancellor knows he needs to be ready.
This is largely because it has resisted changing strict borrowing rules, and there is a point in that; The UK struggled to sell its long-term bonds last time, and as a result it became more expensive for the government to provide services.
There are serious concerns that the UK and other countries may be on the verge of a major economic disaster or even default; This means the Chancellor should take as security-first an approach as he can.
Calm down Labor MPs
Frustrated comments this week from the Confederation of British Industry (CBI) and other business groups suggest Ms Reeves’ efforts to influence them are long gone.
Instead, it faces a Parliamentary Labor Party (PLP) that welcomes its implementation and fears losing its seats.
In addition, it became clear that despite Labour’s large majority, Ms Reeves and Sir Keir would not be able to push through spending cuts.
Instead, Labour’s soft left appears to be dictating issues, whether it’s welfare, child benefit or more than the minimum wage.
So expect further giveaways in the cost of living, with wealth taxes and benefit increases on the rich and a freeze on rail fares.
Provide ammunition against Farage
Ultimately, Labor needs to have a strategy to win the next general election, expected in 2029.
With Nigel Farage’s party clearly ahead in the polls (around 32 per cent for Reform, 19 per cent for Labour), it’s clear that a solution to revitalize the country’s troubled economy is needed to turn things around.
This needs to start with this Budget, where Ms Reeves must present what is often called a political narrative for a Labor government.
If he fails, it is unlikely he or Sir Keir will still be around to lead the party at the next election.
