During times that are considered normal (if we can still recall those), there would usually be a great deal of anticipation around this weekend regarding the upcoming Budget next week.
However, things seem to be relatively subdued at the moment, and it’s not just due to media attention being focused elsewhere.
Jeremy Hunt has been appointed as a ‘calming’ Chancellor, akin to an experienced bank manager brought in to restore order after a group of reckless young bankers spent all their money. Given his appointment and political character, it’s unlikely that he’ll surprise the public with any significant changes come Wednesday.
While one senior Conservative MP is optimistic about a few ‘pleasant surprises’, they note that Downing Street’s priority is to maintain their reputation for caution and prudence.”
Anticipate news of the country being in less debt than anticipated, the potential for pension savings incentives, and measures to aid working families with costly childcare expenses – Faisal’s overview can be found here.
However, during our Sunday program with Jeremy Hunt and Rachel Reeves – who aims to succeed him – we will discuss more than just the details of Wednesday’s announcement.
One budget cannot obscure the significant changes in how the economy operates, or how it fails to work for many voters. Long-term changes in wealth and wages influence how we vote.
Recent statistics indicate that the economy is not as dire as predicted a few months ago, but the past few years and potential future outcomes are concerning.
Simply put, the economy has struggled to grow substantially for an extended period, with no strong resurgence in sight. The Bank of England predicts meager growth for the next few years, only returning to pre-Covid levels in 2026.
Politicians offer various explanations for the issues, some of which are self-inflicted, while others are beyond their control.
The Ukraine war, pandemic, Brexit, political strife, market reactions, spending squeeze, and financial crisis aftermath have had real-life consequences, challenging politicians’ promises of each generation doing better than the last.
For instance, a recent statistic from the Institute for Fiscal Studies revealed that in 1997 over 60% of middle-income individuals aged 25 to 35 owned their own homes, but this figure decreased to just over 20% two decades later. The impact of these changes is significant and ongoing, as seen with Kwasi Kwarteng’s brief time with the No 11 Downing Street red box.
Let’s examine the significant changes that have been happening over a longer period. Wages have been growing slowly and have been sluggish compared to wealth.
The economist and director of the IFS, Paul Johnson, says that a considerable portion of people in their 20s and 30s earn less than their parents did at the same stage of life. It has become harder to buy a house, and renting one is more expensive if one cannot afford to buy. For decades, inheriting from parents was becoming less critical to one’s chances of prosperity.
However, this seems to have reversed and could have enormous consequences for our political choices. Labour leader Sir Keir Starmer has used this as a weapon to imply that the pact with the public, the “social contract,” under the Conservatives, has deteriorated.
Politicians have long courted the support of “hard-working families,” a vague group that could tip the scales of an election if the right solutions were presented to them.
However, these families are likely to be working harder and feeling the effects of life’s difficulties more acutely. Moreover, an ageing population puts additional pressure on the workforce, as fewer people pay taxes but require more money for healthcare and social services.
Both major political parties share a goal of robust economic growth. The consequences of a failure to achieve this growth are concrete: the government would need to increase taxes, borrow more money, or cut spending in areas such as defense or healthcare.
These are not appealing options for political parties to advertise on leaflets, podiums, or social media.