Chancellor Rachel Reeves is facing significant criticism over her handling of the pre-Budget period, with a former top Bank of England official accusing her of a 'fiscal fandango' that has paralysed the UK economy.
Haldane's Stinging Critique
Andy Haldane, the former chief economist at the Bank of England, launched a blistering attack on the government's approach. Speaking to the BBC on Sunday 23 November 2025, Haldane condemned the months of speculation surrounding the Budget, which he claims has caused economic 'paralysis' among both businesses and consumers.
"We have had month upon month of speculation – fiscal fandango," Haldane stated. "That has been costly for the economy. It's the single biggest reason growth has flatlined in the second half of the year."
He called for 'decisive action' in the upcoming Budget to firmly rule out any further tax increases, providing much-needed certainty.
Shifting Sands and Political Pressure
The criticism arrives amidst reports that the Chancellor has been operating on 'shifting sands' due to significant changes in forecasts from the Office for Budget Responsibility (OBR). Transport Secretary Heidi Alexander acknowledged the challenging environment, citing revised OBR productivity forecasts and a difficult global economic climate.
This pressure is compounded by the revelation that improved OBR projections on public finances have allowed Reeves to reportedly abandon plans to raise income taxes. However, other significant tax measures are still anticipated, including:
- Freezing the income tax threshold for an additional two years.
- Introducing a 'mansion tax' surcharge on the most expensive properties.
- Making national insurance payable on new salary sacrifice schemes.
- Rolling out a pay-per-mile scheme for electric cars.
Welfare Reforms and Fiscal Promises
In a bid to manage political fallout, Chancellor Reeves used a column in The Sunday Times to announce post-Budget welfare reforms. She is expected to make a £3bn commitment to scrap the two-child benefit cap, a move likely designed to placate opposition on the Labour backbenches.
Reeves emphasised her 'ironclad commitment to the fiscal rules', vowing to maintain financial stability and reduce national debt. She stated her intention to build fiscal headroom to prepare for unstable global headwinds, a direct message to bond markets seeking prudence.
The Chancellor also pledged to introduce welfare support aimed at tackling youth unemployment and curbing fraud within the system. The core focus of the Budget, she affirmed, will be to lower the cost of living, a measure that could encourage further interest rate cuts and reduce government borrowing costs.
