With just two days remaining until the UK's highly anticipated budget announcement, Chancellor Rachel Reeves is already confronting significant criticism for her handling of the pre-budget process, which leading economists are blaming for damaging economic growth.
Broken Promises and Conflicting Signals
The criticism centres on what many are calling a 'shambolic' approach to expectation management. Two key decisions have particularly backfired. Firstly, at last year's CBI conference, Reeves explicitly promised that the 2025 budget would not involve tax rises on the scale of those in 2024, a promise that now appears set to be broken.
Secondly, just three weeks ago, the chancellor delivered a speech in Downing Street that strongly signalled to both financial markets and her own party that she intended to raise income tax, a move that would breach the party's manifesto. While some allies now claim she was merely floating an option, government colleagues understood it at the time as a firm intention. This was followed by an apparent change of mind, creating widespread confusion.
Economic Fallout from 'Fiscal Fandango'
This prolonged period of uncertainty is being directly linked to the UK's stagnant economic performance. Andy Haldane, the former chief economist at the Bank of England, told the BBC that 'month upon month of speculation – fiscal fandango, basically' has been costly. He stated this uncertainty has caused paralysis among businesses and consumers and is the 'single biggest reason why growth has flatlined' in the second half of the year.
This assessment was supported by Mohamed El-Erian, former chief economic adviser to Allianz, who pointed to declining retail sales and falling business confidence and consumer sentiment as evidence. He concurred that the economy has paid a price for a delayed process full of speculation and conflicting government signals.
The sentiment was echoed by Rupert Soames, chair of the CBI, who described the pre-budget process as 'frankly pretty shambolic' and 'unhelpful'. He criticised the constant 'pitch rolling' of ideas that are inflated and then withdrawn, creating unnecessary confusion for businesses.
Government Defence and Today's Agenda
In response, Business Secretary Peter Kyle rejected the claim that pre-budget uncertainty was the main constraint on growth. He argued that the government's inheritance, specifically the Brexit deal which he said had taken 4% off GDP, was a far greater factor. Kyle defended the government's pre-budget communications, stating ministers wanted to explain the 'direction of travel' without pre-announcing specific measures, and blamed some media speculation for being 'wildly out of line'.
Key events for the day include speeches by Peter Kyle and Kemi Badenoch at the CBI conference, a Downing Street lobby briefing, and a school visit by Keir Starmer. Later, the Commons culture committee will hear evidence from BBC figures, including Michael Prescott and Samir Shah, regarding alleged bias at the corporation. The day concludes with a Reform UK rally in Llandudno featuring leader Nigel Farage.
