Budget 2025 reaction - video transcript

Every budget is about choices, and this one comes with unusually tough trade offs. The real question is how the Chancellor will actually balance them. This finishes what last year's budget started with a starting fiscal headroom much smaller. The Chancellor decided to tighten the purse strings.

She's raising around 24 billion in taxes and growing about 2 billion in spending at the end of the forecast horizon. This doubles the margin against the stability rule to roughly 26 billion. This is a tax and save budget rather than a tax and spend. In the near term support is frontloaded through changes to the two child benefit limit and the reversal of earlier welfare reforms, which will lift borrowing.

But most of the tax rises only come in from 2027–28, which is when borrowing comes down. Now, financial markets may question the timing, but relying on threshold freezes gives the plan firmer footing, with the headroom restored to a relatively high level and fiscal rules assessed annually by the OBR. Fiscal policy is likely to become more predictable and certain. Predictability matters. It should give businesses and households greater confidence to invest and spend over time.

Our full Budget reaction