Autumn Budget 2025

With Rachel Reeves having now delivered her second Budget as Chancellor, there will be a certain amount of relief amongst Labour backbenchers that the period of speculation is finally over. The run-up to today’s speech has been unusually fraught and febrile, with numerous potential policies floated, only to then be withdrawn, and the OBR’s unprecedented though inadvertent leaking of key details only adding to the general air of a lack of control and coordination.

Any relief felt though, will have quickly turned to trepidation as to how the measures outlined will be received by the many and disparate audiences they need to satisfy. The MPs’ own constituents, whose dissatisfaction is clear from the polls; the markets who increasingly drive so much of the overall reaction to fiscal statements; and the businesses whose own frustrations with the uncertainty caused by the lengthy lead-in to the Budget have been made abundantly clear. And, of course, the reaction of those MPs themselves, whose own restlessness grows stronger by the day. All needed to see something in there that spoke to their concerns and their priorities.

The challenge for the Chancellor is that those priorities are often contradictory and conflicting. The lifting of the two-child benefit cap is, at one and the same time, a signal to Labour MPs of a commitment to the party’s ‘traditional values’, and a worrying sign of fiscal laxness to the markets. Those same markets may be reassured by Reeves’ focus on reinforcing her fiscal headroom through revenue raising measures, but those measures will also add to the overall tax burden falling on voters already losing faith in this government. These competing demands, and the desire to please – or, at least, not displease – so many differing groups, inevitably gave the Budget something of a bits and pieces feel, with lots of small ideas and policies, rather than one or two big, eye-catching moves.

But, despite this backdrop, the Chancellor, who can appear nervy at times, gave a buoyant and robust performance in the House, emphasising “her choices” of stability and security, and returning to the key Labour narrative of growth fuelled by significant investment in transport, energy, and housing. With the moves on welfare and the cost of living, increased spending on the NHS, and an attempt – through measures such as the ‘mansion tax’ on homes worth more than £2m – to ensure the greatest burden falls on those best able to bear it, there was much there for Labour backbenchers to cheer. Reeves will hope the mansion tax in particular is successful in placating the backbenches, as it risk burning political capital elsewhere, giving detractors a ready-made attack line in return for a comparatively tiny financial gain of £400m.

And the Labour benches duly gave Reeves a rowdy and relatively upbeat reception, encouraged, perhaps, by the large-scale political operation across the Westminster tearooms and corridors over recent days to bolster the mood and resilience of the Government’s own troops. In this sense then, it was a job well done on a day that had not started auspiciously. For its part, the response from the Opposition (the Conservatives that is, rather than Reform) homed in on a “Budget for Benefits Street paid for by working people” and the Chancellor’s many small-scale “distractions while she steals your wallet;” predictable attack lines, but which is not to say that they may not prove to be effective ones over time.

However, to trot out a tried and tested truism, the real reaction to the Budget, and its resulting success or otherwise, will only be known over the next few days, as the markets respond and the small print is combed through. Early signs from the City are inconclusive – a dip in housebuilders’ shares, for example, but a tentatively solid-to-positive position on bonds – and some patience will be required to see how it all settles out. Whether the Budget has also earned the government renewed patience and support amongst all those they’ve sought to target today - both within their own party and without - will similarly take time to become clear.