Chancellor Rachel Reeves has unveiled a £26 billion budget that analysts describe as a desperate attempt to buy political time for Britain's struggling Labour government. The package, announced amidst plunging poll ratings and internal party unrest, pushes taxes to record highs while directing most revenue toward meeting fiscal targets rather than directly improving public services.
A Budget of Political Necessity
The Chancellor stood before Parliament on November 26th, 2025, delivering what many Westminster insiders consider a make-or-break moment for the Starmer administration. With backbenchers growing increasingly mutinous and colleagues reportedly circling around the Prime Minister, this budget represents what could be the government's final opportunity to reverse its political fortunes.
The £26 billion raised through tax increases will primarily benefit bond investors and placate restless MPs by creating additional "headroom" to meet the government's self-imposed fiscal rules. Only a mere 20% of the new revenue will fund measures "actually making people better off," according to analysis from the Joseph Rowntree Foundation.
Where the Money Really Goes
Despite the substantial figures involved, the budget's individual components reveal a collection of modest interventions rather than transformative policies. The scrapping of the two-child benefit cap, while welcomed by many, represents just one of several reactive measures forced upon the government through policy U-turns.
Other small-scale initiatives include energy bill reductions, train fare freezes, and prescription charge caps. However, these are likely to be barely noticeable against the backdrop of rising living costs, particularly for food, and stagnant wage growth. Nearly one million additional workers will be dragged into the 40% higher tax band by year's end, even as public services continue to struggle with inadequate funding.
The NHS and Economic Reality
Health services remain under severe pressure despite additional billions allocated to Health Secretary Wes Streeting. Recent parliamentary reports indicate that 22% of patients wait more than six weeks for diagnostic tests against a target of just 1%. MPs have expressed "significant concerns" that the NHS England shake-up "has been announced without either delivery plans or funding in place."
The Office for Budget Responsibility projects household take-home pay will grow by just 0.25% annually until the next general election. This minimal growth rate, well below even the turbulent post-financial crisis decade, signals a prolonged cost of living crisis that could fuel political instability.
Former Bank of England chief economist Andy Haldane described the budget process as a "circus," while the Bank itself has discreetly noted that the speculation surrounding the budget has discouraged business investment and hampered economic growth.
Broken Promises and Political Consequences
Reeves entered office having made three key commitments: ending austerity, protecting against rises in the three major taxes, and adhering to strict fiscal rules. These promises have proven fundamentally incompatible, leading to broken manifesto pledges including a national insurance increase for employers and Wednesday's significant stealth tax rises.
The very framework adopted by Reeves to ensure stability—relying on OBR forecasts and tight fiscal rules—has become a primary source of the government's instability. Financial markets are already assessing potential successors to Starmer, with asset managers evaluating which candidate would best serve gilt investors.
While the budget may provide temporary respite, preventing immediate collapse, it fails to address the fundamental challenges facing both the economy and the government's political future. The Chancellor may have bought some time, but at the cost of £26 billion and numerous broken promises, the question remains whether it will be enough.
