Rachel Reeves' Budget this week has several themes.
She gave the City what it wanted.
She spent almost nothing on anything that might add value to the country.
She imposed austerity, although she denied it.
She increased some benefits, recognising that in a country where too little is happening, she had no choice but to do so.
And, because she thinks taxes fund spending, she imposed tax increases to supposedly pay for this failed recipe that represents indecision on her part.
The implication is entirely clear: ordinary people are going to pay for the consequences of her own refusal to challenge the interests of the City and big business.
Let's be candid: this is not a vision. It is an admission of failure dressed up as inevitability.
First, Reeves has accepted the single biggest antisocial neoliberal lie of them all, which is that taxes must finance government spending. That lie is the very foundation of austerity. It denies the basic reality that the UK government creates the money that the private sector uses every day. It refuses to recognise that government spending is what supports jobs, provides income, and maintains the capacity of our economy to function.
And Reeves must know this: she must understand bond markets. In that case, she cannot pretend ignorance. So she must have chosen austerity, not out of necessity but out of ideology.
Second, she pretends that the markets must be appeased. Her fear of the City is so deeply internalised that she cannot conceive of an economic strategy that puts society before finance. The government is, at present, gifting billions of pounds a year in risk-free interest to commercial banks simply because they hold Bank of England reserve accounts. That is a subsidy to wealth. Yet instead of challenging that, Reeves imposes fiscal drag on millions of workers and cuts support to those most in need.
She is taxing the poor to subsidise the rich. That is the policy position that she has chosen.
Third, she will not touch the real sources of economic inefficiency and injustice:
- Extractive corporate profits that drain value out of our economy
- The City's obsession with speculation rather than productive investment
- Tax abuse, most especially, right now, smaller companies set up for just that reason, which she did not even mention
- A housing market built on rent extraction rather than meeting human need
None of those are threatened. Instead, the unemployed are.
Fourth, Reeves has no plan to grow the real economy. Care, education, public infrastructure, energy transition, manufacturing and innovation are all, in effect, being ignored. Her growth rhetoric is hollow because she refuses to invest. And when growth fails to materialise, she responds with more cuts.
This is not an economic model. It is a death spiral.
Fifth, Reeves is reactionary in the most literal sense of the word. She is reacting to the demands of the markets, reacting to the fiscal rules inherited from the Tories, reacting to the fear that she may upset big business. There is nothing transformative about this. There is not even anything conservative. It is simply compliance.
There is no sense of purpose. There is no alternative future on offer. And there is no attempt to say that an economy should serve the people within it.
And so, once again, the story we are told is that “there is no money”, meaning that support must be withdrawn, that public services must be restricted, and that working people must bear the burden of decisions made to protect wealth.
The truth is brutally simple: Reeves has surrendered control of the economy to the very interests that caused its decline, putting them in charge as a consequence.
What would vision look like?
It would mean:
- Recognising that public investment is not a cost but the foundation of prosperity
- Taxing wealth extraction rather than labour income
- Ending the subsidy to banks and tackling the rentier economy
- Rebuilding public services as the productive heart of society
- Designing fiscal rules that support full employment and ecological transition
- Treating the needs of people and planet as goals to be achieved, not constraints to be ignored
But Reeves rejects all this, because it would require confronting the powerful. Labour under Reeves has embraced an austerity that dares not speak its name. The cuts may be quieter, the rhetoric softer, and the justification more technocratic, but the outcome is the same: a Britain made poorer, lonelier, sicker and more insecure in order to maintain the privileges of a financial elite.
We need an economics that says we must invest in the future and care for society. We are not getting that. We are getting a Chancellor without imagination, without courage, and without a plan except to tax people for the consequences of her own failures.
This country deserves better.
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See
https://www.theguardian.com/politics/2025/nov/27/ultra-rich-unelected-power-reshaping-british-politics-equality-trust-report
Noted
That’s a very pertinent report – showing in stark terms how big money, concentrated in fewer and fewer hands is controlling the media, and politics. We really do need a Commission on the Constitution COTC to clean out the whole stables.
Reeves is a symptom/cipher. The cause/authors of the budget is the City of London. These are statements of fact.
Polanski in various interviews moves towards an MMT/spend 1st/tax aftewards/bonds as a funding option narrative. As surely as the sun rises in the morning – a defender of the status quo is wheeled out to provide “balance” by the meeja. The defender spouts nonsense – but in his suit & nice accent he seems credible (it is usually a he).
The country deserves better? Needs better.
Scotland & Wales: next year I suggest you eliminate LINO & the Tories – that would send a message. Vote Monster Raving Loony if you must, but don’t vote for LINO, Tory and Deform.
City of London delenda est.
Mike Thanks to reading Asterix the Gaul to my kids I understand your last line. Bit of culture like! Seems an appropriate comment.
Sorry Richard for an irrelevant comment.
Slightly more relevant is the comments on my MPs website. Many of them are furious with the lifting of the cap on child benefit. One would think an extra £17 or so is enough for them to give up work and
live on the state. What is obvious is many of them are not wealthy but seem eager to inflict more suffering on others who are often poor. Some of the same names also call for punitive measures on refugees, citing the need to defend ‘Christian values ‘ from ‘people who do not share our values’
Well, I don’t share their values either.
Reactionary values are, sadly, found across society and exploited.
But I had a conversation with a 16 year old this week who thinks much as I do about fairness in society.
There is hope.
The “spleen” is because the government has, deliberately in my opinion” chosen to confuse child benefit cap with “Child Benefit” and compounded this by not educating the public to understand that there is also a “ total benefit” cap. Doublespeak is still an effective tool of the State.
Agreed
Despite the madness of speculation beforehand and the announcement, it has all become flat afterwards, as it is the status quo of the same system we have been living under for too long. Apathy for the budget, government and politics. Where is the change, new ideas or long-term thinking?
Is it true apathy (for government, budget & politics) or is it that most people are completely at a loss to know how to change things? It’s not that they don’t care, it’s that they believe they are unable to overturn the establishment. Most people don’t understand enough so lack confidence to challenge those in power, and they have good reason to think nothing they do will make any difference anyway.
Critical thinking, lack of political awareness and social intelligence are intentionally low in the UK. Apathy is growing, and the levels are dependent on where you live. One thing I realised is that stepping away from MSN and viewing alternatives like this is nice, but it is a bit of a bubble. The individualist nature of our society makes it worse, but there is hope for more. The Green Party, with its own version of the politics of care, may be light out of this darkness.
The bond market has been allowed to behave like an unelected authority over economic policy. Politicians and journalists talk as if traders possess special, almost divine, wisdom, when in reality they are simply profit-seekers with no stake in public welfare. By treating their preferences as sacred, governments have surrendered control of interest rates, borrowing and investment decisions that should lie firmly in democratic hands. The result is a system where a speculative casino can overrule voters, limit political choices, and channel public money towards wealthy investors instead of public need. And all the political parties have signed up to this. We’re not being given a choice.
“Politicians and journalists talk as if traders possess special, almost divine, wisdom, when in reality they are simply profit-seekers with no stake in public welfare.”
Correct
I agree, and her rather uncalled for attack on Zack Polanski was just risible proof to be honest when you think about it. Talk about burning bridges……………
To PSR. I agree but would add.
I have nothing against building bridges in politics, or in life. The Green Party of England and Wales would be wise to keep guards at their end of any bridge though. There’s too many antisocial neoliberals about, especially in the Red-Tory Party. No one would allow a parasite open entry into their body, is what I’m saying.
Rachel Robot should certainly be denied entry. As I have read, James Meadway (?) has already slipped through.
Rachel Robot taking money out of the economy is guaranteeing a severe recession and paving the way for deform to take control.
Beyond stupid.
Things need to change. How about this:
Government bonds should work like NS&I products: bought directly from the state, held to maturity, and redeemable early through a central facility. This removes the need for trading on volatile secondary markets and ends the influence of speculative investors over public finances. Interest rates would be set by government policy, not by market sentiment. Pension funds would gain stable, predictable assets without exposure to sudden price swings. Borrowing costs would fall because the government no longer pays speculative premia. Above all, democratic control is restored: economic policy is set by elected representatives, not by an unaccountable financial casino.
Sorry – but pension funds, life assurance and banks all need the secondary market.
And the government does not want to manage redemption calls on demand – that would be disastrous.
OK. Understood. But what if the state managed early redemption in a structured way rather than on demand?
The operational problems can be controlled. For example:
Notice periods (e.g., 30–90 days) would remove the risk of instant arbitrage when interest rates change.
Redemption pricing could be adjusted when rates rise, so investors don’t gain from timing exits, essentially replicating what the market would do, but predictably and without speculative swings.
Multiple series of bonds with different maturities and defined exit rules would give pension funds and insurers the long-term stability they need.
The central bank could smooth liquidity, acting as a controlled buffer instead of relying on volatile market pricing.
This isn’t about instant access. It’s about replacing speculative secondary trading with a managed, rules-based system. One that protects long-term institutions, stabilises government funding costs, and restores democratic control without creating operational chaos.
Wouldn’t a carefully regulated redemption framework address the concerns while removing the casino element?
Early redemption undermines the whole reason for long term gilts, does it not? We then just have on demand central bank digital currency accounts, all effectively subject to perpetually varying interest rates (also giving far too much poower to the City), and that really does not meet the needs of either the government or markets. Sorry – but I can see nothing in here that makes sense bevause your proposal is self conradictory. A long term bond with a redemption option is a short term bond that is mispriced.
I agree that unrestricted, at-par early redemption would undermine long-term bonds. But I think there’s a misunderstanding here, because fixed-term products can allow controlled early exit without ceasing to be long-term instruments.
A good example is fixed-rate cash ISAs: NatWest and others allow early access, but only with a penalty or price adjustment. The product stays long-term; the penalty simply prevents arbitrage. So there is already a workable model for conditional redemption.
What I’m suggesting is something similar, applied differently depending on who the holder is:
Pension funds
Their liabilities are long-term and predictable, so they could have very restricted early redemption, for example longer notice periods, caps, or higher pricing adjustments. They rarely need sudden liquidity, so this would not distort markets.
Life insurers
Similar to pension funds: predictable outflows and long durations. Tight rules could apply here as well without undermining the instrument.
Banks
Banks need liquidity buffers, so they could have shorter notice periods, but with strict price adjustments to remove any gain from reacting to interest-rate changes. This avoids speculative exits while recognising their regulatory needs.
Foreign official investors (including central banks)
These are strategic long-term holders. They could be offered no early redemption, or only in exceptional pre-agreed circumstances.
A further part of the system could be a simple smoothing role for the Bank of England. If a number of investors wanted to redeem at the same time, the Bank could handle the payments temporarily and then settle with the Treasury over a longer period. That prevents short, sharp jumps in cash flows and avoids the need for the Treasury to push a large block of new gilts into the market immediately just to keep things tidy. Instead, the Treasury could adjust its gilt issuance gradually and calmly, purely to maintain the structure of savings instruments on offer, not because it needs the money to fund spending. In effect, the Bank acts as a timing buffer, and the government retains full control of its long-term debt profile without any pressure created by sudden redemptions.
The aim is not an on-demand system, but a tiered framework where early exit is possible only within clear limits that protect the integrity of long-term funding. That keeps long-term bonds genuinely long-term, while avoiding the current market casino.
I have to disagree: you are ignrong the needs of government: they issue 30 year debt because they want it to last 30 years at a fixed rate.
And remember the government does not need to issue debt. The market wants it. So they must play in the government’s terms and not vice versa. Why give even more power to the City?
I’m sorry for coming back yet again, but I wanted to pick up on the point about who actually wants long-term debt. In truth, both government and the market do, but for different reasons. From the state’s perspective, long gilts are useful as a macroeconomic tool: they drain liquidity from the private sector in a stable, predictable way and help manage inflationary pressures when required. Under MMT, this has nothing to do with “funding” spending, but the instrument itself still serves a public purpose.
Investors, on the other hand, value long gilts because they offer dependable returns, regulatory compatibility and a way to match long-dated liabilities. Pension funds, life insurers and overseas reserve managers all fall into this category. The appetite is real, but it exists within a framework where investors also need a route out when circumstances genuinely require it. Without that, long-term gilts become impractical for several categories of holder.
That’s where conditional redemption fits. The point isn’t to undermine the long-term structure of gilts. It’s to ensure that forced selling, liquidity crises or regulatory pressures don’t turn into destabilising events. A system with notice periods, pricing adjustments and clearly defined categories of holder means that redemption can happen when it genuinely must, but without turning gilts into short-term instruments. For investors, it provides essential safeguards. For the state, it keeps long-term issuance viable, because without such mechanisms, many investors simply couldn’t commit capital for decades.
In other words, conditional redemption serves both sides: it preserves the durability government wants for liquidity management while giving investors the confidence that they will not be trapped if circumstances change. And crucially, it aligns with the MMT view that gilts exist for macroeconomic stability, not to “finance” spending. Current fiscal rules have obscured this purpose by treating debt levels as if they define the government’s capacity to act, which has pushed issuance far beyond what’s required for inflation control. But redesigning gilts along lines that protect both issuer and holder could help restore the original rationale. And it gets rid of the Casino. That part of “the City” quite simply vanishes!
I’ll leave you in peace now. But thanks for giving me the opportunity to have these kinds of dreams.
I’m sorry, but we’re not going to agree.
You are asking for the state to take all the risk and to be held hostage whenever markets desire. I am utterly baffled as to why you see benefit in that.
There are 723,000 vacancies in the economy as of October 2025. 1.79 million unemployed.
946,000 people aged 16 to 24 were NEET in July to September 2025, which was 12.7% of all people in this age group.
I don’t know of any period since WW2 when the number of vacancies has exceeded the number of unemployed people, when we had full employment as Beveridge defined it. And I believe we will never have full employment unless we abandon the full funding rule.
Even if we do this, we may – as Beveridge anticipated – discover by evidence or argument that the retention of full employment is impossible without the socialisation of the means of production, in which case such socialisation will have to be undertaken.
Richard, you should be the Beveridge for our time!
Thanks, but I will never make any such claim.