The 2024 Autumn Budget in one word? Big.
What we got from Rachel Reeves today was, in economic terms, a major departure from economic policy as we’ve known it in this country for the past decade-and-a-half.
We got the single biggest increase in taxes in any fiscal event since 1993. The tax burden itself is now heading up to the highest level in history. We got a significant departure from the policies and promises laid out in the Labour manifesto.
Only a few months ago, Labour pledged not to make dramatic changes to Britain’s economic policy – no significant tax rises, no dramatic changes to public spending. But today the chancellor delivered significant changes.
3:09 Budget 2024: Key takeawaysBudget latest: Experts react to Labour’s ‘massive’ tax plans
The old fiscal rules are out and now this government plans to borrow many billions of pounds more. It plans to increase investment considerably.
It plans to raise taxes on those with investments, on those with assets who could previously pass them on to their children (including business owners and farmers). In the meantime, it plans to spend considerably more on the health service and on public investment than previously slated.
It’s worth saying: while the government inherited the public finances in a worse condition than they looked before the election, even the Treasury’s “black hole” of £22bn cannot explain the dramatic change in economic policy here.
Advertisement 0:23 Reeves refuses to rule out future tax hikesIt does not explain the dramatic increase in borrowing, spending and taxes – these are policy decisions by the current government. And, many would say, quite right too. Surveys suggest the British public support higher taxes, especially if they are used to improve the National Health Service.
Many think the UK should be spending more on its public services, even if that means we all have to contribute more (though they are generally less enthusiastic if asked whether they would be happy to pay higher taxes themselves). And there is little dispute that this country’s investment levels have been too low for too long and could afford to be higher.
More from Sky News:The chancellor’s announcementsWhat the budget means for youSupermarkets’ tax burden soars
Image: Labour’s manifesto promised only slight economic changes and small tax increases Follow Sky News on WhatsAppKeep up with all the latest news from the UK and around the world by following Sky News
Tap hereHowever, that wasn’t the pitch Reeves and Keir Starmer made at the election. They promised, in their manifesto, only slight economic changes and only small increases in taxes. They promised to spend much of their time in office cleaning up the mess from the last government. Reeves promised to be the iron chancellor of fiscal discipline.
But this budget is considerably less disciplined with the public finances than expected. But what will worry the chancellor is that despite this extra largesse with both investment and current spending, the UK economy is not going gangbusters as a result.
Be the first to get Breaking News
Install the Sky News app for free
Spreaker This content is provided by Spreaker, which may be using cookies and other technologies. To show you this content, we need your permission to use cookies. You can use the buttons below to amend your preferences to enable Spreaker cookies or to allow those cookies just once. You can change your settings at any time via the Privacy Options. Unfortunately we have been unable to verify if you have consented to Spreaker cookies. To view this content you can use the button below to allow Spreaker cookies for this session only. Enable Cookies Allow Cookies OnceđŸ‘‰ Listen to Sky News Daily on your podcast app đŸ‘ˆ
The Office for Budget Responsibility actually cut its forecasts for long term growth. That promise made by Starmer to achieve the highest economic growth in the G7 looks highly unlikely – even after the implementation of all these policies.
And in the hours after the speech, markets reacted in a way that will cause nerves in the Treasury. It’s nothing like the lurches in government debt yields we saw after Liz Truss’s mini budget in 2022. But the pound fell and the interest rates investors charge the UK government rose. That’s not something any chancellor would like to see after their first budget.
The next few days promise to be very interesting both in politics and in markets.