Rachel Reeves entered the 2025 Budget already facing deep political unease, and Wednesday’s statement did little to ease the strain. Despite delivering a speech packed with fiscal tweaks, revised spending commitments and new forecasts, the reaction has made one thing clear: Reeves’ chancellorship remains on a knife-edge.
Her promise on entering office was simple competence, stability and growth. Yet, with downgraded productivity forecasts from the OBR and a bleak national mood, critics argue she has delivered none of the three. Even her own pre-budget video acknowledged public anger, though she avoided admitting that the same frustration that swept Labour into power is now turning against them.
Reeves’ allies hoped the Budget would stabilise her standing. Instead, it inflamed concerns that Labour’s economic strategy is drifting and may already be alienating the voters who gave it a mandate only a year ago.
Tax Rises Take Centre Stage Despite Income Tax Freeze
The Budget will ultimately be remembered for the many taxes Reeves increased, rather than the one she avoided income tax. Although she backed away from raising income tax rates, the package contained a web of new levies, frozen thresholds and indirect charges that will hit large swathes of the public.
For Reeves, the challenge is that these measures rarely win applause. Stealth taxes, particularly threshold freezes, quietly pull millions into higher tax brackets a dynamic already fuelling public resentment. Politically, it is a risk that may haunt Labour into the next election cycle.
The chancellor insisted her mix of revenue-raising tools was necessary to stabilise the public finances, but even within her own party, many fear the optics: a government elected on promises of no major tax rises now seen delivering exactly that through the back door.
Labour MPs Divided as Reeves Appeals for Unity
In a meeting with Labour MPs, Reeves urged the party to “stick together,” warning that her Budget was a package deal “not a pick-and-mix.” She claimed MPs would support “90–95%” of the plans but must accept the unpopular elements as well.
Some in the room found her tone firm yet honest, while others described her plea as “borderline desperate,” exposing the fragile unity behind the government’s economic agenda. The cancellation of the winter fuel payment cut helped placate some MPs, but the anxiety around tax rises remains significant.
With local elections looming and polling softening, Reeves is keenly aware that internal party discontent could spiral. The Budget, while designed partly to soothe the backbenches, may only offer temporary calm.
A Budget Shaped More by Labour’s Internal Politics Than Public Opinion
Much of the Budget appeared aimed at Labour MPs rather than voters in marginal seats. Ending the two-child benefit cap, for example, won loud approval inside the party, yet critics argue it clashes with Reeves’ earlier image as a fiscal disciplinarian.
This contradiction fuels broader doubts about her strategic consistency. Her pre-election pledge not to raise major personal taxes has become an “original sin,” according to analysts trapping her between manifesto commitments and fiscal realities.
In attempting to please a fractious Labour coalition, Reeves may have created a Budget that fails to inspire confidence outside Westminster, leaving the government exposed at a vulnerable moment.
Chaos Behind the Scenes Raises Questions About Competence
The humiliating premature leak of the Budget details by the Office for Budget Responsibility added to a sense of disorder around the entire process. Coupled with a long, drawn-out pre-Budget period littered with mixed signals, ministers have been accused of mismanagement.
This year’s leaks and shifting messaging have sparked calls for a complete overhaul of how Budgets are prepared. Critics say the chaotic run-up weakened the chancellor’s authority and encouraged damaging speculation while undermining Parliament’s role.
While Reeves cannot be blamed for decades of flawed Budget traditions, the failures occurred on her watch. For a government elected on stability and professionalism, such missteps are politically toxic.
Delivery Style Strong But Authority Still Lacking
Reeves’ parliamentary performance was sharper than some expected. She delivered a structured, confident speech, peppered with light humour and pointed exchanges with opposition MPs.
But a strong delivery cannot disguise the reality: she does not yet command the Commons as a powerful chancellor should. In an era where few ministers excel in the chamber, this may seem normal but authority is crucial when delivering painful economic policies.
Budget Day is the one moment a chancellor stands without alibi. And in a period of political volatility, Reeves’ position remains precarious.
A Defining Budget And A Warning for Labour’s Future
Ultimately, this Budget underscores the fragility of Labour’s position. Reeves attempted to balance fiscal realism with political survival, but instead highlighted the tension between the party’s spending ambitions and its tax promises.
The coming weeks will show whether the public and markets accept this complicated mix of new duties and spending shifts. With Reeves’ credibility tightly linked to Labour’s broader fortunes, any backlash could ripple throughout the government.
As former chancellor Nigel Lawson once observed, the entire country judges the economy on Budget Day. In 2025, that judgment may prove especially harsh and its consequences long-lasting for Reeves, Starmer and the Labour government.
