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dispatch
Despite the millions of words written and spoken about today’s Budget, this event will probably be largely forgotten in 10 years’ time.
Even if you mention one or two, most budget proposals are quickly forgotten by most people, except for some political geeks and the smart people at the Institute for Fiscal Studies who are paid to evaluate budgets.
Rachel Reeves, the UK Chancellor of the Exchequer, did her best to challenge that practice. Her first Budget, tabled on Halloween 2024, is still being debated a year later because she extracted 25 billion pounds ($33 billion) from businesses through an increase in employers’ national insurance contributions (payroll tax) and a corresponding increase in unemployment.
British Chancellor of the Exchequer Rachel Reeves poses for a photo in a jeans rail during a visit to the Primark store on Tottenham Court Road in London, England, on November 24, 2025.
Karl Cote | AFP | Getty Images
But basically, very little budget remains in your consciousness even after several weeks.
An exception was made by Geoffrey Howe on March 10, 1981, when Britain was in stagflation.
Inflation, which began in the mid-1970s, has remained at 15% and unemployment has increased by 1 million people compared to the previous year.
The national debt was also rapidly increasing. Mr Howe’s response was a Budget that would raise £4bn of tax, a huge sum at the time, through a freeze on thresholds (a tactic Mr Reeves plans to deploy today) and significant increases in tariffs on alcohol, tobacco and motor fuel.
A windfall tax was imposed on banks whose profits had ballooned due to the government’s recent interest rate hikes aimed at curbing inflation (the Bank of England did not gain financial independence until 1997), and on oil that was then beginning to flow out of the North Sea.
Because the speech came from the government’s commitment to tax cuts, it caused a huge controversy, with several members of Mr Howe’s own Conservative Party leaving during the speech.
At the end of March 1981, 364 economists (including Mervyn King, future Governor of the Bank of England) famously wrote to The Times, claiming that his policies had “no basis in economic theory or supporting evidence” and warning that the Budget threatened Britain’s “social and political stability”.
Although Howe’s Third Budget was painful, it is now remembered as the budget that curbed inflation, reduced the high exchange rate that was hurting British industry, and made it possible to lower interest rates. Most economic historians now agree that this set Britain on a growth trajectory for the rest of the 1980s.
Ghosts of past budgets
It is also well remembered for the 1988 Budget tabled by Howe’s successor, Nigel Lawson, when Prime Minister Margaret Thatcher gathered at 10 Downing Street. It remains polarizing among experts.
Lawson had already shown himself to be a reformist Chancellor with his 1984 Budget, which simplified the business taxation system by abolishing the Investment Income Levy and eliminating many tax breaks, while also lowering the corporate tax rate.
On 15 March 1988, he went further, reducing the top rate of income tax from 60p to 40p and the basic rate from 27p to 25p. But he also announced upcoming changes to mortgage tax breaks, causing a surge in mortgage applications as people look to buy homes before they go into effect later this year.
Thatcher later recalled in her memoirs: “This provided an immediate stimulus to the housing market…at exactly the wrong time when the housing market was already heating up.”
This fiscal easing, which took place during the period of monetary easing, can be seen as having sown the seeds of the economic recession and the accompanying housing market crash in the early 1990s.
Another budget that many remember, sadly for the wrong reasons, is Gordon Brown’s on 2 July 1997. The Labor leader’s first budget in 18 years included a £5.2bn windfall tax on privatized utilities to fund Brown’s proposed ‘workplace welfare’ scheme, corporation tax cuts and VAT cuts on household fuel.
But the most memorable measure was the decision to strip pension funds of the tax credits they received for paying dividends.
In his budget speech, Mr Brown justified the measure by saying: “The current tax credit system encourages companies to pay dividends rather than reinvesting their profits. This is not the best way to encourage long-term investment.”
The subsequent history of business investment in Britain suggests that Brown failed in this aim. To make matters worse, the measure is thought to have caused cumulative losses to pension funds of £250bn over the next 20 years and accelerated the closure of private sector defined benefit pension schemes as employers decided they could not afford to keep their schemes open.
These are being replaced by less generous defined benefit plans in which the risk of a retiree’s income shortfall is borne by the employee rather than the employer.
Millions of private-sector workers born around 1960 and after were left with a poorer retirement than they would have otherwise enjoyed, and the closure of defined benefit plans effectively meant they were forced into an exodus, forced to hold bonds instead of stocks to meet their debts. Institutional investors and pension funds owned around half of the UK stock market before Mr Brown’s move. That has now fallen to about 4%.
Another memory lingers since 1997. Budget Day is the one day in the parliamentary calendar when MPs (the Prime Minister) may drink drinks other than water. Labour’s Denis Healy presented a 1970s budget over a brandy, Mr Howe favored a gin and tonic and Ken Clarke, Conservative prime minister from 1993 to 1997, enjoyed a whiskey from a delivery box. Mr Brown switched to water in 1997, and every subsequent prime minister has followed suit.
Given how much time Prime Ministers spend on budgeting, it is surprising how few remember them, with the exception of 1981, 1988 and 1997.
The danger for Reeves is that her budget is okay on both ends (few in Westminster expect her to keep a third). There’s no good reason.
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Deutsche Bank’s Chief UK Economist Sanjay Raja talks about the upcoming Autumn Budget
Laura Cooper, global investment strategist at Nuveen, said the UK was facing “more serious growth pressures” that needed to be factored into the budget.
Jim O’Neill, a former Conservative UK finance minister and chief economist at Goldman Sachs, said the Budget was driven by a desire to keep Labor MPs on side.
— Holly Ellyatt
need to know
UK Autumn Budget 2025. The UK is preparing for a “smorgasbord” of tax increases to be announced on Wednesday. You can follow CNBC’s budget coverage throughout the day on our live blog here.
Markets are on edge over the UK’s budget plans. Market strategists say Mr. Reeves needs to stick to his rules and that choosing to raise taxes is essential to appease investors. But they warn the prime minister must do more than that.
(PRO) 3 ways investors can trade budgets. Investors say pessimism creeping into Reeves’ key autumn budget proposal this week is masking a range of contrarian opportunities across sectors and asset classes.
— Holly Ellyatt
Quote of the week
What I would like to see in the budget is measures to address the cost of living challenges that our people face, and I would like to see investment in public services. We have had years of austerity, which has hurt economic growth. We need to really foster growth.
— John Swinney, First Minister of Scotland
at the market
London-listed stocks rose this week. FTSE100 It has risen 0.6% since last Wednesday as investors await the UK’s autumn budget. British indexes hit their highest levels in the week on Tuesday, a day before British Finance Minister Rachel Reeves took to the streets to try to please voters and money markets.
It’s been a busy week for defense stocks on the back of a possible peace deal between Kiev and Moscow. European names fell this week, while British personal names fell rolls royce, BAE Systems and kinetic were mixed.
british lb It has fluctuated over the past few days, but recently rose 0.18% against the US dollar compared to the previous week. It hit its lowest level last Wednesday.
UK government yield 10 year bondGold, known as gilt, declined during the same period, going from 4.546% to 4.483%.
Performance of the Financial Times Stock Exchange 100 Index over the past year.
— Tasmin Lockwood
very soon
November 26: Fall 2025 budget draft announced
November 28: UK car production figures for October
1 December: Bank of England mortgage statistics for October
— Holly Ellyatt
