John Healey claimed he was delivering a ‘breathing space’ Budget today – offering small amounts of help to households and businesses now as a down payment on bigger reforms to come.
What that meant in practice was a lot of government tinkering – as Gerard Lyons points out in his analysis for CapX, this Budget has more tax and spending measures than any in recent history.
Yet the overall effect was remarkably modest, given the state of the public finances and the global economic storms Healey acknowledged are heading our way. Robert Colvile called it ‘a peacetime Budget for a wartime world’ – and one that left the Chancellor with just £15 billion of fiscal headroom, down from £23.6 billion in March.
But perhaps that misses the point. Despite Healey’s claims, this Budget may not really have been about giving breathing space to the people of Britain at all. It makes far more sense if it was designed to offer that breathing space to a Prime Minister in search of a mandate.
Andy Burnham denies he is planning a snap election, but few in Westminster believe him. All the can-kicking and the accompanying grab-bag of small, crowd-pleasing policies on show today do nothing to dispel that suspicion.
Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.
Marc Sidwell
Editor, CapX
Today’s Takes
Fresh thinking from CapX
This state-knows-best Budget won't deliver growth
Gerard Lyons
‘Micro-management may allow the Government to claim it is taking action, but it is no substitute for tackling the macroeconomic challenges of weak growth, rising spending pressures and fragile public finances.’
John Healey’s first Budget was filled with 98 specific tax and spending measures. Yet he failed to tackle the UK’s debt problem. Only sustained growth can fix it, but the OBR expects just 1% growth next year as the energy shock bites. Meanwhile the tax burden is set to hit a record high. Read More
Is Britain really a MoneySavingExpert economy?
Ryan Bourne
‘Margaret Thatcher certainly tried to liberate markets to improve their efficiency, but vast swathes of UK state regulation before and since have actively raised the price of essential goods and services, often by restricting supply.’
Today’s Budget showed the influence of MoneySavingExpert Martin Lewis on economic policy: the Chancellor’s removal of standing charges from energy bills is something Lewis has long campaigned for. But that doesn’t mean that Britain’s whole economy is focused on keeping prices low, as Ed Conway of Sky News has recently argued. If only. Read More
The Capitalist: Liam Halligan & Daniel Herring: what’s in the Budget?
John Healey has delivered his first Budget as Chancellor. In this special edition of The Capitalist, Liam Halligan is joined by Daniel Herring, the Centre for Policy Studies’ Head of Economic and Fiscal Policy, to go through what was announced and what it means for taxes, growth and the public finances.
Best of the Web
Labour have never understood the City
Liam Halligan, Daily Mail
‘It’s hard to calculate precisely how much wealth was generated by the Big Bang, but it is certainly in the billions.’
Yesterday was the anniversary of the Big Bang, when Nigel Lawson and Margaret Thatcher transformed the City into the financial capital of the world. Neil Kinnock opposed the Big Bang and Lawson’s tax cuts, and Labour are still plagued by ideological hostility to financial services. Britain needs another Big Bang but we shouldn’t expect it from Andy Burnham or John Healey. Read More
Can Netanyahu cling on?
Adam LeBor, The Spectator
‘The catastrophic security failures around the October 7, 2023 terror attack, which took place under the Likud government, do not appear to have deterred many of its ultra-loyalist voters.’
On Tuesday, neither of Israel’s main political camps won a clear victory despite record turnout. Benjamin Netanyahu’s coalition has just beaten out its opponent by a few seats but it neither guarantees his party victory nor Netanyahu remaining leader. Both blocs have ruled out entering into coalition with one of the Arab parties for now, but the opportunity for electoral victory with a de-facto alliance may prove to be too tempting. Read More
Who cares about America’s debt?
Daniel Hannan
Stat of the Day
And if you want more...
– Protecting pensioners from income tax is unfair (City AM)
– The conservative case for a car-free Oxford Street (The Telegraph 🔒)
– The rise of AI empires (Foreign Affairs)
Can we make CapX better?
Or reply to this email to let us know your thoughts.
We'll be back tomorrow.