Labour’s first big political moment brings risks and rewards in the UK budget

Two years ago, the British government launched a fiscal plan that disrupted financial markets, raised mortgage rates, caused the pound to collapse and led to the downfall of Prime Minister Liz Truss, who would resign after less than two months in office.

When the New Labor government presents its long-awaited budget on Wednesday, no one expects a repeat of that disaster. But the ill-fated Truss episode is a reminder of how dangerous budget announcements can be, and how high the political stakes can be for a new government.

That is particularly true of Prime Minister Keir Starmer, whose government has gotten off to a rocky start since Labor won a landslide victory in July’s election. Mr Starmer’s popularity has plummeted amid reports of infighting and accepting freebies from donors.

“It’s effectively restarting the government,” said Stephen Fielding, a political historian at the University of Nottingham. “This has to work as a media strategy, a political strategy, and above all an economic strategy.”

None of these three are easy. It is a measure of the challenge facing Starmer that it is not even clear which is the most difficult. Britain’s economic growth is sluggish, its public finances are in decline, and Conservative-leaning newspapers are unrelenting, following a cost of living crisis and 14 years of Tory-led government, much of which was marked by austerity. Voters are getting impatient.

Aiming to break away from “muzanism”

Rachel Reeves, the Chancellor of the Exchequer, will deliver the Budget with a series of policies aimed at restoring Britain’s long-term growth and fixing rotten public services, while also avoiding blowing through the budget and budget deficits. , will try to overcome these countercurrents. Raising basic tax on working people is at the heart of Labour’s election promise.