Rachel Reeves has been a disaster chancellor, she’s done. She’ll be asked to make more difficult decisions that would break a manifesto pledge, such as increasing VAT, income tax and/or NI and then get the sack down the line.
She undermined confidence in the economy before the budget by talking down the inheritance from the Tories. The budget itself was a disaster, with the employer NI increases, closing of non-dom status has pushed wealth creators out of the country and undermined private sector investment by taxing jobs. Played fast and loose with the ‘fiscal headroom’ with large increases in borrowing for things like in public sector pay… we’ve ended up borrowing more than expected because tax receipts are less than forecasted (shock) and debt costs are increasing and gilt yields have surpassed the high point when Truss ‘crashed the economy’.
Hence we have a Chancellor scrambling for pennies on the pound and a ‘Spring Statement’ that is another Budget in all but name to correct course. This is pretty unprecedented.
To be a broken record on this, the implications for Liz Truss ‘crashing the economy’ over £45bn of tax cuts, was that a Labour government wasn’t going to be able to come in and make ‘unfunded’ spending commitments.