Britain’s chancellor Rachel Reeves inherited a deeply troubled economy: slow growth, strained public services and high debt. After months of confidence-sapping speculation, at Wednesday’s Budget she delivered a budget that was dramatic in scale: around £40bn in higher taxes — the largest increase for a generation — £70bn in higher spending, and £30bn more in borrowing, per year. This marks a turning point for Britain, towards a significantly stronger role for the state in its economic model, with the tax-to-GDP ratio set to rise to a postwar high by the end of the decade. Much of the tax burden is set to fall on business.
Reeves’ package has begun the hard work of stabilising public services, raising capital investment and improving the fiscal rules. But, when so much of the heavy lifting she envisages falls to the state, the question is whether the reality of her growth strategy matches the rhetoric.