New Writing: With the date now set for the Autumn Budget in the UK and the Chancellor in need of a good result, Jim McClelland asks: Is this the wrong time to go on the defensive and ‘park the bus’?
The Labour Party Conference opened in Liverpool this week, with the Government trailing in the polls and rumours emerging of a leadership challenge to Prime Minister Keir Starmer.
It seems neither the conference, nor the country is convinced Things can only get better.
Under the microscope will be any new fiscal policy promises and growth forecasts for the UK, especially as the Autumn Budget now officially looms large on 26 November, 2025.
In a video message to confirm the date, Chancellor Rachel Reeves felt the need to begin her rallying cry with a note of defiance, or denial, stating: “Britain’s economy isn’t broken.”
When that is the starting point for your pitch to the public, you know you are in trouble.
Chancellor in need of a win
It is easy to think of the Budget as a statement made on behalf of the Government and the Cabinet, as a whole. However, in truth, its success, or failure, is always pinned squarely on the Chancellor, themself.
Not without risk, this is their big moment, politically and personally.
It is only three years since Kwasi Kwarteng delivered his infamous ‘mini-Budget’ — a statement so ill-received it crashed the UK economy. The so-called Growth Plan 2022 not only cost Kwarteng his job, but contributed to Liz Truss breaking the record for the shortest-ever tenure as British PM, at just 45 days.
For current Chancellor Rachel Reeves, it could also be make-or-break time. Much like a Premier League football manager coming off the back of a string of defeats, Reeves badly needs a win. However, the range of tactical options at her disposal looks limited.
More politics than economics
Anyone making major strategic decisions affecting the wealth and prosperity of an entire nation, from corporates to consumers, inevitably finds themselves in the media spotlight.
The likes of Jerome Powell, as Chair of the US Federal Reserve, and Andrew Bailey, as Governor of the Bank of England, often talk about being led by the data, when explaining to the press how they arrived at key decisions around interest rates and monetary policy.
In other words, they prefer to point to the science that underpins the economics.
By contrast, the Chancellor is a politician, first and foremost; and, maybe, an economist second. Inevitably, they are influenced by the polls, not just the data. They are answerable to a party and an electorate; they get held to account for promises made in manifestos.
This makes their job harder — it is not just about facts and figures, but hearts and minds.
So, what options has the Chancellor got, that make both political and economic sense?
Inflation, debt and GDP
The Labour Party Manifesto 2024 on which the current Government got elected last July contains an explicit pledge not to raise rates of income tax, national insurance or VAT.
Politically, that appears to take three options off the table from the get-go. It is possible to play with thresholds, to effectively move the goalposts — so, total tax rises only in relative terms, for instance, allowing for inflation — yet, these areas remain hyper-sensitive.
The alternative for a Chancellor wanting to boost the revenues coming into the public coffers is to stimulate growth — which is the perilous path taken by Kwarteng and Truss.
The good news here for Reeves is that the latest independent forecast for GDP from the Organisation for Economic Co-operation and Development (OECD) raised expectations slightly for the UK in 2025, up from 1.3% to 1.4%. However, the OECD still predicts a slump back the following year, with figures unchanged for 2026, flatlining at just 1.0%.
The not-so-good news is that the Organisation also confirmed the UK has highest rate of inflation this year of any of the advanced G7 economies. Given that the proportion of UK debt compared to GDP actually hit 100% last year, too, the fiscal challenge is plain to see.
In short, costs are going up, there is no cash in the kitty, and borrowing is a burden.
Are there any rays of sunshine, then, peeking through the storm clouds ahead?
Investment and reform
Yes. In fairness to the Chancellor, the two bright spots on the horizon are precisely the same primary tools for change that she identifies in her video: investment and reform.
Industries in focus include artificial intelligence (AI), on the one hand, and housebuilding, on the other.
So, to learn more about the policies in prospect and why, in football parlance, this is not the time for the Chancellor to ‘park the bus’ — check out the full-length article, free to access and read on The Hub:
Is this a win, lose, or draw Budget?
To view a back-catalogue of articles authored by Jim McClelland for ‘The Hub’, please see archive here.
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