Labour’s economic plan under scrutiny ahead of second budget

Rachel Reeves has announced the latest possible date for her second Budget in an effort to salvage Britain’s dire public finances.

On Wednesday morning, the Treasury confirmed that the Chancellor would deliver the Budget on Nov 26 – the final Wednesday of the autumn.

The choice of date gives Ms. Reeves more time to attempt to rescue the public finances following a challenging first year in the Treasury.

This follows Sir Keir Starmer’s appointment of three economic experts to key Downing Street roles on Monday in a reset widely perceived as undermining his Chancellor’s authority.

Ms. Reeves is required to give the Office for Budget Responsibility (OBR) 10 weeks’ notice but has chosen instead to give the watchdog nearly 12 weeks.

She and Sir Keir are facing fresh questions over their economic plan after Britain’s government borrowing costs surged to a 27-year high on Wednesday.

The value of the pound also fell this week despite Sir Keir’s internal reshuffle, which saw Darren Jones, Ms. Reeves’s former deputy, brought into his No. 10 team.

Observers said the move was designed to sideline the Chancellor, whose first Budget in October last year included tens of billions of pounds of unpopular tax increases.

In a video posted on her X account on Wednesday, Ms. Reeves insisted the British economy was not “broken,” but admitted: “I do know that it’s not working well enough for working people.”

She said: “Bills are too high and you feel you’re putting more in but getting less out and that has to change.”

Ms. Reeves said Britain had “huge potential” and her mission over the past year was “fixing the foundations” of the economy after Labour entered power.

“There are still challenges. The cost of living pressures, I know, are still very real. We need to bring inflation and borrowing costs down, and we do that by keeping a tight grip on day-to-day spending and by enforcing my non-negotiable fiscal rules,” she added.

“Renewal is our mission and growth is our challenge. Investment and reform are our tools, the tools to build an economy that works for you and your family and rewards you.”

“More pounds in your pocket, an NHS that is there when you need it and opportunities for all, including your kids and grandkids. Those are my priorities as Chancellor, they’re the priorities of the British people, and they’re what I’m absolutely determined to deliver.”

This comes as Wes Streeting, the Health Secretary, admitted Ms. Reeves had “much more to do” to fix the British economy.

Asked about the state of the markets, Mr. Streeting told Sky News: “When we came in, people saw the state of the public finances, borrowing was at a record high.”

“And the Chancellor, since she came in last year, has been determined to restore stability to our economy, to get growth back into our economy and get the conditions where we can get the nation’s finances back to health, our public services back to health and also the finances of every family back to health too.”

Mr. Streeting went on to say there had been “some encouraging signs in the right direction,” adding: “We’ve seen some of the highest growth in the G7, we’ve seen wages rising faster than living costs for the first time in many, many years. But the Chancellor will be the first to say there will be much more to do. Britain is not out of the woods.”

Ms. Reeves’s first Budget in Oct 2024 raised taxes by a total of £40bn, including unpopular tax increases for businesses and family farms.

The £25bn increase in the employers’ National Insurance bill has been blamed for business closures reaching their highest level since the pandemic.

Reforms to agricultural property relief will also mean that farmers have to pay inheritance tax on family farms for the first time.