Chancellor John Healey's recent budget has been met with significant criticism for its perceived shortcomings in addressing the cost of living crisis, with opponents arguing it will lead to a fall in living standards for middle-earners and families.
Despite pouring billions into benefits, the budget has been criticized for pushing taxes to a record high and failing to make difficult decisions regarding defense spending and the welfare budget. A package of measures intended to ease the cost of living was described as modest, with one commentator dubbing it the 'Gherkin Budget' due to minor tariff cuts that would shave only a few pence off the price of pickled cucumbers.
Kemi Badenoch, the Conservative leader, stated that the budget "does not come close to meeting the moment." She argued that the government has "overspent, over-borrowed, over-taxed and are drowning in an out-of-control welfare system." Badenoch also suggested that the Prime Minister might be contemplating an early election, prioritizing party interests over national needs.
The Office for Budget Responsibility (OBR) has downgraded its growth forecast for the upcoming year to just 1 percent, with fears that the situation could worsen due to potential new military actions that could drive up oil prices.
Key measures in the budget included raising taxes on savers, landlords, and banks, while offering a £100 rebate on council tax for 20 million households in bands A to D. Official forecasts indicate a rise in inflation and government borrowing. The budget also allocates an additional £5 billion annually for welfare spending and delays a planned increase in fuel duty. While a target for defense spending of three percent of GDP by the end of the decade was set, the funding mechanism remains unclear.
Economists have expressed concerns about the budget's impact on growth and certainty. Paul Johnson, former head of the Institute for Fiscal Studies, commented that "the numbers add up because the numbers were made up" and that the budget failed to provide the certainty and stability needed for growth. The OBR forecasts that living standards are set to fall in the next 12 months, with real household disposable income per person projected to be £420 lower than two years ago and not expected to recover until April 2029.
The Resolution Foundation think-tank described the outlook for living standards as "dire," with chief executive Ruth Curtice noting that the Chancellor has "spread the jam thin" and lacks sufficient buffer to withstand economic shocks.
Business leaders also voiced their disappointment. Rain Newton-Smith, CBI chief executive, stated that the budget "lacks the bold moves that would have made it easier for firms to invest, hire and grow." Andrea Egan, leader of the Unison trade union, felt the budget fell short of turning the Prime Minister's economic ambitions into action.
Tax increases have been substantial, with the tax-to-GDP ratio expected to surpass its historic high and continue rising. The continued freeze on tax thresholds is pushing more individuals into higher tax brackets.
Individuals and business owners have expressed varying impacts from the budget. A teacher and mother of one, Abigail Giles, noted that the £100 energy bill relief is insufficient for long-term help amidst rising costs. Coffee and gelato shop owner Kyle Hyams welcomed small business rates relief but expressed disappointment over the lack of VAT reduction for the hospitality industry. Hair and beauty salon owner Jo Bevilacqua anticipates increased prices and customer loss due to the rise in the national minimum wage.
Amanda Stecker, a luxury holiday home owner, criticized the proposed overnight visitors tax, questioning the taxation of British citizens holidaying within the UK. Freelance journalist Charlotte Owen highlighted the squeeze on middle-income families due to frozen income tax thresholds, while florist Carrie Cox, a lifelong Labour voter, expressed feeling "shattered" by the budget's lack of support for high street businesses.
Farmer James Bowditch stated that the industry received no mention in the budget, expressing concern that current policies encourage farmers to give up. Pensioner Linda Southall described the budget as "compassionate" despite her inability to retire. First-time buyer Layla Phillips believes the new schemes offer some help, while businessman Francis Fulford called the proposed mansion tax "lunacy."