Chancellor Rachel Reeves is facing sharp criticism from leading economists who have labelled her budget plans as bordering on "fiscal fiction" due to the dramatic backloading of tax increases and spending cuts until just before the next general election.
Delayed Pain for Voters
The Institute for Fiscal Studies (IFS) delivered a stark warning about the chancellor's strategy, noting that most of the £77bn in tax rises and spending cuts won't be felt until after April 2029 - precisely when voters are expected to head to the polls. Helen Miller, the thinktank's director, expressed serious doubts about the government's ability to follow through with what she called "near-heroic restraint in an election year."
Miller didn't mince words in her assessment, stating: "[It is] a backloaded set of tax rises that almost entirely delay the pain. It's reminiscent of the fiscal fictions of recent years. I hope this is a government able to deliver on its plans. But I have my doubts."
Concrete Impacts on Taxpayers
The budget's specific measures reveal the scale of what's being postponed. The extension of income tax and national insurance threshold freezes for an additional three years will have significant consequences for workers across the country. According to analysis, by 2029, more than a quarter of all taxpayers will be dragged into the highest income tax brackets.
The financial impact breaks down to basic-rate taxpayers paying £220 more annually by 2029, while those on higher rates face an additional £600 each year. This represents a particularly striking reversal for Reeves, who herself warned last year that extending the freeze - originally a Conservative measure - would hurt working people.
Election-Year Austerity Looms
Separate analysis from the Resolution Foundation adds weight to the IFS concerns, showing that nearly three-quarters of the £77bn in extra tax revenue over the next five years will materialise after April 2029. The year 2029-30 alone is expected to contribute £26bn to this total.
Other significant measures scheduled for the end of the current parliament include:
- A pay-per-mile levy on electric vehicles starting April 2028
- A £2,000 annual cap on salary-sacrifice pension contributions before national insurance applies
- Limiting growth in day-to-day departmental spending to approximately 0.5% annually in real terms from April 2028
The Treasury has defended its approach, arguing that savings will come from efficiencies rather than service cuts. However, the IFS noted that successive governments have typically increased spending plans as elections approach, casting further doubt on whether these restrained spending assumptions will hold.
