The Rest Is Money 225. How Damaged Is Reeves By Budget Chaos?
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Nov 17, 2025 Market chaos surrounds Reeves and Starmer, raising concerns among investors. The abrupt U-turn on the income tax rise sparks debate over economic strategy and political credibility. As public trust wavers with broken manifesto pledges, new data reveals unexpected wage growth helping to ease the fiscal gap. Investors react by selling gilts, fearing instability within Labour's leadership. The hosts speculate on possible budget measures, including a gambling tax and EV road pricing, as they navigate the turbulent financial landscape.
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Productivity Downgrade Created A Big Hole
- The OBR's supply-side review downgraded growth and reduced tax revenue, creating a large fiscal hole.
- That initial £20bn+ shortfall set the stage for the contested proposed tax rises.
2p Income Tax Was The Clean Fix
- Raising the basic rate of income tax by 2p was the simplest predictable way to fill most of the hole.
- It shares the burden broadly and is easier to model economically than patchwork measures.
Morning Briefing After The FT Scoop
- Robert describes being briefed Friday morning after FT reporting that the income tax rise was off.
- He recounts a exhausted official telling a revised story that wages were rising faster, improving tax receipts.