Reeves’s Budget is dead on arrival

The Budget speech has no doubt been finalised. The red box has been dusted off. And the pie charts are ready to be released. Assuming Chancellor Rachel Reeves doesn’t call in sick tomorrow, the Treasury, along with the rest of us, will be waiting to see how tomorrow’s Budget is received. But do we really need to wait? With the pound falling, the economy stagnant, and house prices sliding, the truth is that this Budget is dead on arrival.

After all the leaks and spin we have endured over the past few months, it may seem as if there have already been ten Budgets. A dozen or more major tax changes have been floated, scrapped, then quietly revived in a stripped down form. Tomorrow, we will finally see just how big the ‘black hole’ in the public finances is, how much more will be redistributed in welfare, and which taxes go up to at least keep borrowing under control. At yet one point is certain: Rachel Reeves’s second Budget has already flopped.

Only today we learned that retail confidence is falling at the sharpest rate in seventeen years. The hedge funds are reported to be shorting the pound in anticipation of a sell-off as Reeves speaks. The jobs market has stagnated as companies postpone hiring people. Growth has ground to a halt and inflation is still stubbornly above target. And the property market has died, largely because everyone is terrified of a steep rise in council tax.

Sure, bank shares are up slightly after the Financial Times reported that Reeves had promised not to slap an extra windfall tax on them so long as they all say nice stuff about the Budget after it is delivered. But the overall outlook is grim.

It is not hard to figure out why. The Budget has been so chaotic that it has destroyed confidence. Businesses and consumers are too scared to spend or invest because they need to hoard cash to pay all the extra taxes that are coming their way. And the constant leaks from inside the Treasury have created the impression of a chancellor who has lost control of the process, who doesn’t know what she thinks, and is flailing around with little idea of what to do next.

A more confident Chancellor might be able to pull off a spectacular Budget, raising extra cash, finding some measures to boost growth, and reassuring everyone that the economy would soon be firing on all cylinders again. But not this one. The signs are there that the Budget has already crashed in the markets – and it is too late to change that now.