UK's budget calms markets and Labour faithful, but will it appeal to voters?

Plan, which hikes taxes on the wealthy, may only offer temporary respite

- Mark Landler

Britain's Chancellor of the Exchequer Rachel Reeves presenting the budget statement in the House of Commons in London on Nov 26. PHOTO: AFP

(PHOTO: AFP)

When Britain's top economic official, Ms Rachel Reeves, presented the government's budget on Nov 26, it was a make-or-break moment for her.

No less on the hook was the man seated behind her, Prime Minister Keir Starmer, whose future may also depend on how voters and the financial markets judge her plan.

The early response to Ms Reeves, the Chancellor of the Exchequer, suggested that she threw Mr Starmer at least a temporary political lifeline.

The tax and spending increases she announced went down well with Labour members of Parliament, who had become restive with a government hobbled in its first 16 months by policy reversals, a languishing economy and plummeting popularity.

The markets also seemed satisfied.

The pound rose against the dollar while the government's borrowing costs declined, sparing Mr Starmer the backlash that sank one of his Conservative predecessors, Ms Liz Truss, when she rolled out a budget with sweeping tax cuts in 2022.

But whether the budget will help Mr Starmer win back the favour of a disenchanted public is a very different question.

Nothing in Ms Reeves' presentation stirred hope that Britain would shake off the sluggish growth that has hampered it for more than a decade.

Faced with unforgiving fiscal constraints, she announced tax increases on both the wealthy and middle-income.

"It was a weak budget by a weak chancellor, trying to shore up a weak position and maybe buying herself some time," said Professor Robert Ford, a professor of politics at the University of Manchester.

"But it will compound their weakness in the medium term. The biggest problem Starmer and Reeves have now is credibility."