Joel Hills, business and economics editor at ITV News, was not impressed by Peter Kyle’s claim on the Today programme that the pre-budget uncertainty has not been much of a problem for the economy. (See 9.30am.) Hill posted this on social media.
The business secretary, Peter Kyle, has just told Today that he “refutes” the assertion that three months of endless leaks, briefings and speculation about which taxes will rise in the Budget has harmed the economy. The governor of the Bank of England is clear that it has.
Good morning. We are two days away from the budget and, although we have a good idea of some of the main measures in it, the real debate about whether they are wise or not will not kick off until Wednesday afternoon. But Rachel Reeves, the chancellor, is already facing criticism about the handling of the process ahead of Wednesday, and this morning, with the CBI holding its annual conference, those comments are getting fresh prominence.
Put bluntly, expectation management is widely seen as having been shambolic. Two decisions in particular have backfired. First, this time last year, at the CBI conference, Reeves said explicitly that the 2025 budget would not involve tax rises on the scale of the 2024 one, but now it is clear that they will. Then, three weeks ago, Reeves gave a speech in Downing Street signalling very clearly to the markets, and to her party, that she was going to have to raise income tax in the budget, in breach of the manifesto. (Some of her allies now claim she was only floating an option, but that is not how her government colleagues understood it, or presented it, at the time; she was pitch rolling, not kite flying.) But then she changed her mind.
Economists are saying that that this lack of certainty has been bad for growth. This is what Andy Haldane, the former chief economist at the Bank of England, told the BBC yesterday.
We’ve had month upon month of speculation – fiscal fandango, basically. And that’s been costly for the economy. It’s caused paralysis among business and consumers. It’s the single biggest reason why growth has flatlined, it’s been grounded in the second half of the year.
In an interview this morning on the Today programme, Mohamed El-Erian, former chief economic adviser to Allianz, the German finance company, said the economic data suggested Haldane was right. He explained:
There are a number of data points that suggest that the prolonged speculation has flatlined growth. You see this in the latest retail sales numbers, which were the first to decline since May.
You see this in the decline of business confidence and consumer sentiment.
And there’s a general agreement that the economy has paid a price for a process that has been delayed, that has been full of speculation, and that has seen the government send conflicting signals.
And Rupert Soames, chair of the CBI, made the same argument on Times Radio this morning. Soames, a former chief executive of Serco (and brother of the Tory peer Nicholas Soames), said:
This whole run into the budget has been really difficult and I think that in any future budgets lessons will be learned not to indulge in the constant technically pitch rolling – all these different ideas being inflated and then withdrawn and then tried again. It’s been really confusing to businesses and it’s unnecessary … This frankly pretty shambolic process in the run into [the budget] has been unhelpful.
Peter Kyle, the business secretary, is the government speaker at the CBI conference. In an interview on the Today programme, when he was asked about Andy Haldane’s claim that pre-budget uncertainty was the biggest constraint on growth, Kyle rejected that. He said:
The biggest single challenge to growth in this country is the inheritance this government had. The Brexit deal alone has taken 4% of GDP off the whole economy. That is a fact. It far outweighs anything that speculation could and did cause.
He also defended what pre-budget briefing there has been in public, saying he and other ministers wanted to explain “the direction of travels”, while not pre-announcing budget measures. And he said some pre-budget speculation in the media was “wildly out of line”.
Here is the agenda for the day. Over the last few months the Monday agenda has often included a Nigel Farage press conference. But this morning he’s gone quiet, and is not facing the journalists. It’s not hard to guess why.
10am: Peter Kyle, the business secretary, speaks at the CBI conference.
11.20am: Kemi Badenoch speaks at the CBI conference.
11.30am: Downing Street holds a lobby briefing.
Afternoon: Keir Starmer is visiting a school in Cambridgeshire with Bridget Phillipson, the education secretary.
2pm: More in Commons releases new polling about public expectations ahead of the budget.
2.30pm: Steve Reed, the housing secretary, takes questions in the Commons.
3.30pm: Michael Prescott, the BBC adviser who wrote the memo critical of the Trump speech edit and other instances of alleged bias that ultimately led to the resignation of the director general, gives evidence to the Commons culture committee. At 4.30pm Samir Shah, the BBC chair, and Sir Robbie Gibb, the former Tory spin doctor who is on the BBC board and who has led attempts to fight supposed leftwing bias at the corporation, give evidence. We will be covering the hearing on a separate live blog.
4pm: Zia Yusuf, Reform UK’s head of policy, take part in a Q&A at the CBI conference.
4.40pm: Nigel Farage, the Reform UK leader, speaks at a rally in Llandudno.
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