Thursday, October 31, 2024

The pound has fallen by about 1 per cent today, and long-term interest rates have gone up, which is not the ideal response to a Budget, although the reaction is obviously being hyped by Labour's opponents on social media. 

This adverse reaction rather late in the day modifies my assessment that Rachel Reeves had survived the most important test of a Budget, which is that the Institute for Fiscal Studies gave it a reasonably clean bill of health on day two. 

The markets' reaction is nothing like the meltdown that followed the Liz Truss-Kwasi Kwarteng mini-Budget of 2022, and the Budget has been praised by the IMF. 

But if Labour hoped that the Budget would allow it to turn the corner on its early troubles, that may have been optimistic. 

Written by John Rentoul

Which London station is named after a prime minister?

Answer at the bottom of today's email

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Daily briefing

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Chancellor accepted workers will be paid less, but asked 'what alternative was there?'

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MOST COMMENTED

A look back at Budget week

Rachel Reeves confirmed her status as an all-powerful chancellor

Whatever you thought of the Budget measures, the statement was a commanding performance by a politician who does her homework. She pre-empted Rishi Sunak's response brilliantly, saying before he had stood up, "Never mind all that, what would you do instead?"

As a result, Sunak's swan song was overcooked and ineffective, as I wrote yesterday. 

The critical test for Reeves's Budget, as I wrote today, was to survive the Institute for Fiscal Studies' scrutiny this morning. Paul Johnson, the director, was rude about Reeves continuing to play "silly games", but the edifice did not collapse. 

Reeves has confirmed her status as a powerful chancellor. She has taken difficult decisions early on, which could pave the way for crowd-pleasing later. 

QUOTATION OF THE DAY

"The continued pretence that these changes will not affect working people risks further undermining trust"

Paul Johnson, director of the Institute for Fiscal Studies

Quiz answer: Liverpool Street: the street was named after Lord Liverpool in 1827, at the end of his 15 years as prime minister; the station was named after the street, when it was built to replace Bishopsgate station in 1874

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