Reeves must ignore political wailing and finally cut spending
No amount of wishful thinking can change the economic reality. Reeves must make the hard decisions today, writes James Reed
Reeves can no longer ignore economic reality
For me, the key test of today’s Budget is this: how much of it is determined by politics and how much by economics?
Since I studied it at school, I’ve thought that economics is like gravity – it has a forceful impetus of its own but when push comes to shove you can’t argue with it.
And it’s an unarguable economic fact that despite Chancellor Rachel Reeves telling us her last Budget had set a course that would fix the problems in the public finances, this has not proven to be the case.
Britain is seriously overindebted, and the cost of servicing our debt has reached an eyewatering £110bn a year. Markets, we are told, won’t bear much more borrowing. So it’s good to see that the Chancellor appears to accept that she needs to cut her cloak according to her cloth. What’s less encouraging is how she intends to do it.
If the Chancellor intends to come back to raise taxes again, as has been extensively trailed, she most certainly should be balancing these rises with cuts to government expenditure. A balanced package of this sort would, in my opinion, be the only fair and palatable way to proceed.
Unfortunately, thus far this parliament has shown it doesn’t have the appetite or the inclination to cut expenditure at all. The rebellion by Labour MPs that stopped welfare reforms in their tracks demonstrated that only too clearly. This reflects a wider unwillingness in society to confront difficult decisions.
Some 21 per cent of the working age population is now inactive, meaning that 9m people are neither employed nor actively seeking work, an expensive and untenable situation. Unemployment has also ticked up to five per cent. But any proposal to tackle these problems is met with howls of protest, often frightening seriously disabled people who would not be affected by any sensible welfare reform.
The Chancellor should ignore these noises off and pair tax rises today with an equally serious effort to curtail government expenditure.
Without credible reform – especially around welfare and the size of the state – she risks repeating past mistakes and undermining the fiscal credibility she claims to defend. Otherwise, this Budget may not prove to be a turning point but a moment when economics ultimately reasserts itself over political wishful thinking. Gravity, when you get it wrong, can be very painful and sometimes terminal.
The Christmas Challenge
My charity Big Give is set to launch its biggest fundraiser of the year, the annual Christmas Challenge. For one week from December 2, any donation you make via biggive.org to any of over 1,500 participating charities will be doubled. Last year, we raised £44.7m in one week, making Big Give the UK’s biggest public fundraiser, and this year we hope to do even better. Match funding is a simple idea, but a brilliant one, and we know our donors love the fact that their money ends up going twice as far. I hope you will join us this year and multiply your generosity. It’s your chance to double the impact you make.
A recommendation
There’s a new art gallery in St James’s called the Modern Art Gallery, and my wife Nicola loved the inaugural exhibition by artist Joseph Yaeger. The paintings in the exhibition are produced with watercolour on thickly gessoed canvas or linen, and are well worth a viewing if you are in the area.
Brixton’s new mural
Reed is proud to be sponsoring Transport for London’s Art on the Underground programme this year, and I urge you to check out a new mural artwork by Rudy Loewe just unveiled at Brixton Underground station. Titled The Congregation, Loewe’s new work honours Brixton’s history as a place of resistance and community gathering, particularly for London’s black communities. The work features 18 scenes celebrating the figures and history of the local area, and Loewe interweaves stories from archival research and interviews, visualising the rich, sensorial experience of Brixton.
Pee-er of the realm
There was a minor media storm in my neighbourhood when Labour peer and former ambassador to Washington Lord Mandelson was photographed relieving himself on a public street, apparently after a boozy dinner with one of my neighbours, George Osborne. Unfortunately, this indiscretion happened against my garden wall. Happily we’ve had heavy rain since then. One of my witty neighbours is now suggesting we mark the spot with a special blue plaque: ‘Lord Mandelson, pee-er of the realm, urinated here, November 2025’.
James Reed is the chairman and CEO of Reed