Prime Minister Keir Starmer has been forced to defend a tax-raising Budget, following accusations he broke a key Labour manifesto pledge and damning assessments from leading economic experts.
Economic Experts Condemn Budget's Growth Plan
The first Budget delivered by Chancellor Rachel Reeves on Thursday 27 November 2025 has been heavily criticised for its failure to boost the UK's economic prospects. Two of the country's most respected fiscal watchdogs, the Institute for Fiscal Studies (IFS) and the Office for Budget Responsibility (OBR), issued stark warnings. Both institutions concluded that the Budget lacked the necessary measures to significantly impact Britain's economic growth.
The IFS was particularly scathing in its analysis, directly addressing the central political controversy. The institute stated explicitly that the government's decision to extend the freeze on income tax thresholds amounts to a clear breach of Labour's manifesto promise not to raise taxes for working people.
Starmer's Defence: Public Services and Child Poverty
Facing immediate backlash, Sir Keir Starmer moved to justify the contentious financial plan. He presented two primary reasons for the necessity of the tax-raising measures. Firstly, he argued it was essential to protect and fund vital public services that many Britons rely on. Secondly, he positioned the Budget as a crucial tool in the fight against child poverty.
In a related and equally controversial decision, Starmer also defended the government's move to abolish the two-child benefit cap. This policy change is central to his argument that the government is prioritising support for the most vulnerable families, despite the overall tax burden increasing for many.
Political Fallout and the Manifesto Promise
The political fallout has been swift and severe. The core of the criticism hinges on the perception that the new government has broken a flagship commitment made during the election campaign. The freeze on tax thresholds, while not changing the headline rates of tax, results in individuals paying more tax as their earnings increase with inflation—a phenomenon known as 'fiscal drag'.
This has placed Sir Keir Starmer in the difficult position of having to deny that his government has reneged on its word, even as independent experts assert the contrary. The damning verdicts from the IFS and OBR have amplified the crisis, creating a significant challenge for the new Labour administration as it attempts to establish its economic credibility.
