John Healey's first Budget has been seen by some pundits as an attempt to kick the can down the road, leaving awkward conversations about the UK's welfare bill and national debt for another day. The Chancellor repeated the phrase "breathing space" multiple times in his speech to MPs, framing the Budget as relief for households and for a Prime Minister who needs to win his own mandate from voters.
Early election speculation grows
The question now is whether Andy Burnham will surprise his opponents by calling an early general election, possibly as soon as next May, or gamble that the economy will improve and provide firmer ground to fight from later. Gordon Brown faced a similar dilemma after becoming PM in 2007, and his decision to delay an election until 2010 ultimately cost him his job. Burnham and Healey, both Labour ministers at the time, are keenly aware of this.
Polls suggest the new PM is the most popular leader across the UK, including in Scotland. Reform UK is sliding in the polls nationwide, and the Greens in England are imploding. Nigel Farage and Kemi Badenoch's parties are in danger of cancelling each other out in a race to the right, which could allow Labour to sail through the middle.
Budget acknowledges difficult winter
Yesterday's Budget was not full of pre-election giveaways but an acknowledgement that a difficult winter lies ahead, with rising energy bills coming down the line. Springtime could bring reasons to be cheerful, particularly if Donald Trump, chastened by a thrashing in the American mid-terms next month, goes out of his way to end his war in the Middle East. Alternatively, the American president might think the way to boost his waning popularity is by picking another fight elsewhere.
Closer to home, Burnham has talked about his desire to reverse the mistakes of Thatcherite policies like privatising water companies in England and the break-up of locally controlled bus services. It would be unfair to expect a Labour government to upend 40 years of economic orthodoxy with a Budget statement lasting just 55 minutes.
Reactions and economic outlook
Andrea Egan, leader of the UK's largest trade union, said the Budget was the first chance "to turn the Prime Minister's historic ambition for a new economic settlement into action - on that count it falls short." Paul Nowak of the TUC said: "As Trump's illegal war in Iran continues to cause havoc with the global economy and drive up costs, the Prime Minister and Chancellor have started to give families and firms much-needed breathing space."
Healey, a son of West Yorkshire, is no rabble-rouser at the dispatch box. His speaking style is calm and measured, but he is a steely politician already fighting an election campaign that is yet to be declared. He worked alongside Brown in the run-up to the 2001 election, which saw Labour effortlessly achieve a second landslide on the bounce.
Healey blamed Trump's pointless war against Iran for needlessly driving up the international cost of oil and gas, which in turn means misery for ordinary households left with higher bills. However, he had less to say about the fact the UK Government will have to borrow more over each of the next five years than it had previously planned.
The Chancellor announced a series of additional short-term measures to ease cost of living pressures and set a direction of travel on delivering good growth in every postcode. OBR forecasts suggest cost of living pressures will continue well into 2027, particularly for those on low and insecure incomes. Real household disposable income is expected to grow by just 0.2% next year.
Healey's measures won't amount to much in the long term unless inflation is brought down, which should in turn lessen the cost of fuel and the prices in supermarkets. The UK Government, based on its own estimates, faces making painful spending cuts of 2.6 per cent across most departments between 2028-29 and 2031-32. The reality is most Labour MPs would never tolerate such swinging cuts. Something has to give before then, and that something could be an early general election.
