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It’s been the longest run-up to a Budget anyone can remember, it started just after the last Budget, so how much damage has this chaos caused?
In this instalment of Week in Business, City AM Editor-in-Chief Christian May argues that the government's early pledges of stability now ring remarkably hollow.
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It's been the longest runup to a budget
0:02
anyone can remember. It started just
0:04
after the last budget. So, how much
0:06
damage has this chaos caused? Welcome to
0:08
the week in business with me, Christian
0:10
May.
0:14
In her first speech as chancellor in the
0:16
first week of July last year, Rachel
0:18
Reeves used the word stability eight
0:20
times. She pledged to deliver economic
0:23
stability and she reiterated that
0:25
commitment to the Bank of England and to
0:27
the Office for Budget Responsibility.
0:29
the OBR. She told us then, "These
0:32
institutions are guarantors of our
0:34
economic stability, and I will not be
0:36
playing games at their expense." In
0:38
reality, the last few weeks, months
0:40
even, have been a chaotic guessing game
0:43
with the chancellor pulling the country
0:45
this way and that, floating major
0:46
economic policies, then abandoning them.
0:49
And the OBR has been right in the middle
0:51
of it. The government today stands for
0:54
the opposite of stability. Politically,
0:56
it's basically game over for Kier
0:58
Starmmer, who has dragged his party down
1:00
to irreoverable levels in the polls.
1:02
Economically, the foundations are
1:04
sagging. Nothing's stable here with
1:06
quarterly growth this year declining
1:08
from 0.7% to 0.3% to 0.1%. I've been
1:12
working in Westminster in the city for
1:14
almost 20 years, and I cannot remember a
1:16
more undisiplined, reckless, and
1:18
damaging approach to economic policy.
1:20
The only comparison is the flash in the
1:22
pan disaster of Liz Truss and her mini
1:25
budget. But while the forces of politics
1:26
and economics put an end to that
1:28
nonsense relatively swiftly, what we're
1:30
witnessing now is a drawn out, lingering
1:33
sense of drift. And you can at least
1:35
argue that Truss had a plan. She just
1:38
didn't have a plan for her plan. Back to
1:40
the OBR and its central role in laying
1:42
the tracks on which chancellors build
1:44
their budgets. Now, personally, I think
1:46
the institution and particularly the
1:48
processes that it runs is ripe for
1:51
reform. their authority and their time
1:53
frames relegate chancellors to
1:55
participants in a bureaucratic process
1:57
rather than leaders. But as Rachel
1:59
Reeves says, we must deal with the world
2:00
as it is and not the world as we would
2:02
like it to be. Besides, Reeves boosted
2:04
the OBR's status and gave it god-like
2:06
authority, so she's stuck with them.
2:09
Now, today, the shadow chancellor, Al
2:11
Stride, has written to the OBR, saying
2:12
that Reeves has sullied the budget
2:14
process by allowing it to be played out
2:16
in newspapers. Nothing wrong with that.
2:19
and drawing the independent OBR into the
2:21
crossfire. The reason he says this is
2:23
because a series of government leaks
2:24
implied that the OBR has found an extra
2:27
10 billion quid worth of breathing space
2:29
that things weren't as bad as they first
2:31
thought and that therefore the
2:32
chancellor wouldn't have to increase
2:34
income tax. Now remember days earlier
2:38
Reeves addressed the nation and then
2:40
again spoke to the BBC at length
2:42
specifically laying the groundwork for
2:43
hikes in income tax. Economists and Mel
2:47
Stride point out that she did all this
2:49
after the OBR was supposed to have
2:51
delivered its final forecasts as part of
2:53
its budget process. People are now
2:55
questioning the chancellor's claims
2:57
about the supposed revision to economic
2:59
data that got her off the hook. The OBR
3:01
delivered its final forecast to the
3:03
Chancellor on October the 31st, but the
3:05
income tax plans weren't ripped up until
3:07
2 weeks after that. Mel Stride has asked
3:10
the head of the OBR to confirm that no
3:13
changes have been made to the forecast
3:15
since October the 31st beyond the
3:17
impacts of measures submitted by the
3:19
Treasury for scoring. It will all come
3:21
out in the wash. It always does. And on
3:23
Wednesday next week, we'll get a lot
3:25
more information. But this row over who
3:27
said what, when, and why is just part of
3:29
a bigger story about a chancellor who is
3:32
not in control of her budget and a prime
3:34
minister who is barely in control of his
3:37
government. The impact of this is real.
3:39
It isn't a Westminster game. It isn't
3:41
just about parties scoring points.
3:44
Survey after survey tells us that
3:46
business confidence has been hammered by
3:48
this uncertainty. That consumer
3:50
confidence has created because of this
3:52
uncertainty. That investment decisions
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and hiring decisions have been frozen
3:56
because of this uncertainty. Just today,
3:59
a survey of 400 entrepreneurs
4:01
collectively responsible for 8 billion
4:04
pounds in revenue reveals that 95% of
4:07
them say the government does not reward
4:09
hard work. And who can blame them? What
4:12
is the reward for their hard work?
4:14
Higher taxes, the threat of even higher
4:16
taxes, a shambolic government and
4:18
chaotic approach to economic policym
4:20
that undermines their ability to plan,
4:23
invest, and grow. Also today, the ONS
4:26
has released its findings setting out
4:28
what's keeping businesses up at night.
4:30
And the number one issue reported by
4:32
firms this month is, you guessed it,
4:34
economic uncertainty. The best that we
4:37
can hope for next week when the
4:38
Chancellor delivers her second budget is
4:40
that it puts an end to the confusion and
4:43
uncertainty. We know it will be painful.
4:45
We know it will come at a cost, but at
4:47
least the shadow fighting will be over
4:49
and we'll actually know what we're
4:51
dealing with. And if you want to get to
4:53
grips with the chancellor's
4:55
announcements and what it means for the
4:56
country, for business, for your
4:58
finances, then join me and my colleague
5:00
Alice Denby along with an allstar cast
5:02
of guests from politics, the city, and
5:04
business for a special live budget
5:07
broadcast streaming from the London
5:09
Stock Exchange, 2 p.m. on Wednesday the
5:12
26th of November. I'll see you there.
5:14
And in the meantime, stay up to date and
5:15
in the know with the Cityam app and on
5:17
city.com.
5:23
[Music]
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