ITS NOT A BUDGET OKAY

The government insists Rachel Reeves’ March 26 announcement is just a routine update—but with welfare cuts and market risks, it looks more like a second Budget. Here’s why that matters.

Who does the Government think it is fooling when it says we’re just getting a run of the mill update and not a full Budget from Chancellor Rachel Reeves?

Rachel Reeves is due to deliver her second fiscal announcement of her career as the Chancellor of the Exchequer on 26 March.

It would be really easy for me to just list out what’s coming up. We don’t know a lot but we do know she might be of a mind to tweak the cash ISA allowance.

We also know that her and her boss, Prime Minister Keir Starmer, now seem quite keen on some fairly substantial welfare cuts – plus a mini bonfire of Government quangoes that cash cheques and do little else.

So far it’s all a bit of a DOGE tribute act. Which is weird for a left-wing party but here we are.

But the bone I’m keen to pick today isn’t about these policy measures. If you’d like to hear more about that in detail, please have a listen to our latest podcast episode with interactive investor personal finance editor Craig Rickman instead.

No, as the title suggests, the problem I’ve got is the fiction we’re all being told to believe that this somehow isn’t a ‘Budget’.

Budgets vs Statements

Now, the difference between a Budget and a Statement is one of measures. The Budget contains lots of tax and spend measures while the Statement just has the fiscal forecasts and other numbers update.

But in practice does it ever work like this?

I would argue if Rachel Reeves is about to gut £6 billion from the welfare bill she is veryn much not just doing a Statement – it is a full-blown Budget.

Okay, well, why does that matter? It matters because:

a. Reeves said she’d only do one Budget a year. If she admits that has immediately been upgraded to two, it is admitting the first Budget was, well, a bit of a failure for not getting stuff buttoned up for 12 months.

b. It matters to big and ugly stuff like the bond market. Everyone from Westminster to the Square Mile is now quite nervous about upsetting the so-called ‘bond vigilantes’ and triggering another Truss-style meltdown.

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If Reeves admits she’s having to do a full whack announcement (and with it, more debt, spending, tax, etc that comes with that) then the bond market might be quite unhappy about more uncertainty on uncertainty. It risks scaring the horses, so to speak.

In reality this all doesn’t really matter that much, but the fiction that we’re just getting a perfunctory business update is working quite hard to play down some of the fairly serious problems facing the UK economy. By not facing that head on we’re just trying to minimise big problems that need tackling – ASAP.

Photo credits: HM Treasury