LONDON — For a nation addicted to political chaos, it wasn’t a bad metaphor.

A stream of measures from Rachel Reeves’ budget leaked an hour before Britain’s finance minister delivered them Wednesday, when the independent fiscal watchdog accidentally published its market-moving 203-page analysis online.

Britain’s problems, though, run far deeper than one spectacular budget leak.

Keir Starmer was elected last year on a 10-year plan to change the country, and a vow to end “sticking-plaster politics.” But U.K. politics remains far stickier than the prime minister feared. Faced with a productivity downgrade and a need to calm the markets, his chancellor ditched her overzealous promises of last year — that Labour would not raise taxes on “working people,” come back “with more tax increases” or extend a freeze on income tax thresholds beyond 2028.

Instead Reeves did all three, unveiling £26 billion of tax rises (on top of £40 billion last year) to balance the books and “beat the forecasts” of stagnation. As a result, Britain’s tax take will reach an all-time high of 38.3 percent of GDP in 2030-31.

This time, Reeves insisted, it’s for real. Her mission is to finally end Britain’s economic doom loop — to stop the country living year-to-year, hand-to-mouth. 

In some ways she made progress, more than doubling her fiscal margin for error to £21.7 billion. The Office for Budget Responsibility (OBR) watchdog ruled that she was more likely to meet her “fiscal rules” by 2030 than any chancellor since the Covid-19 pandemic. 

Yet her position is still immensely fragile. The OBR said her margin remains relatively small and Britain’s public finances are “relatively vulnerable to future shocks” that would leave her coming back for more pain in future years. Reeves pointedly refused to rule out further tax hikes before 2029.

And that’s if Reeves remains in the job at all. Facing dire polls, the Labour MPs who cheered her on Wednesday are chattering privately about whether to unseat Starmer next year. If they do, Britain will be onto its sixth prime minister since 2019.

‘The gravitational pull of short-termism’

In short, “nothing in British economic policymaking survives the gravitational pull of short-termism,” said Cameron Brown, a former adviser to Conservative chancellors including Kwasi Kwarteng (whose “mini-budget” led to a market backlash so severe it forced Kwarteng and Prime Minister Liz Truss from office).

Brown argued: “Reeves came in promising stability and long-term planning, but this fiscal event shows how quickly the system drags even the most disciplined chancellor back into the year-to-year cycle.

“From my time in the Treasury, the pattern is familiar. We would spend months crafting multi-year strategies, only for the final decisions to be dictated by the latest OBR run, the next inflation stats or the politics of the Commons that week. The faces have swapped, but the architecture is the same.”

This manifests itself in a few ways.

Firstly, many of Reeves’ tax rises and spending cuts are backloaded in a way that will delay the pain until around or beyond the next U.K. general election, currently scheduled for 2029. Wednesday’s tax rises would net the Treasury £10.7 billion the year before the election, but £23.1 billion and £26.6 billion in the two years after it.

Reeves, on a visit to an NHS hospital that will receive new funding, told POLITICO this was exactly the long-termism she wants. “When you’re making tax reform, it’s often not possible to change those rates overnight,” she said. Government officials insist the changes will be legislated for soon and start before 2029, so are locked in. 

Yet that’s all very well until another chancellor unlocks them. Reeves declined to answer whether she believes she will still be in her job by the end of the decade.

These sorts of accounting tactics are, of course, common in all budgets. Reeves did promise a big change of tack — to end Britain’s 15-year freeze on fuel duty from fall 2026 — but even then she still managed to extend it by another six months.

The bond markets rule everything

Secondly, Britain’s finances remain at the mercy of small fluctuations to the bond markets. 

A sharp rise in interest rates in recent years, along with smaller domestic demand for government debt, means U.K. debt costs more to serve than any other G7 country. Desperate to convey this disparity to the public, one young Labour MP, Gordon McKee, created a viral video explaining it using a stack of custard creams (a popular British biscuit). 

Reeves’ higher fiscal buffer left the bond markets happy Wednesday. Internally, government officials shared images of a Bloomberg TV ticker that said: “U.K. markets rally, bond yields fall: U.K. traders welcome borrowing restraint.”

Yet the OBR said debt will still rise from 95 to 96.1 percent of GDP by the end of the decade, twice the level of the average advanced economy. Even if the government meets its own fiscal rules, more will still be paid on debt interest than at almost any time in Britain’s post-war history.

The markets’ dominance led to a stream of pre-budget leaks and briefings, many of which were designed to calm traders. One MP even said they weren’t worried about how their colleagues react — only the bond markets.

Labour MPs wait in the wings

But (and thirdly), Reeves’ colleagues matter too.

The biggest cheer by far from Labour MPs during her speech was for the removal of the “two-child limit,” a Conservative policy that blocks benefit payments for third children in a family. MPs had failed to remove it last year, but months of internal pressure finally paid off.

More widely, the budget was plainly progressive — even if, as Reeves admitted, it will have a cost for many of the “working people” she once promised to protect. The chancellor juxtaposed tax hikes on £2 million homes, pension contributions and savings pots juxtaposed against a higher minimum wage and help for energy bills. She pointed to distributional analysis that showed it will help the poorest tenth of Brits the most and the richest tenth the least.

Yet her MPs’ immediate shout of “more!” showed the pressure will not stop there. Some have bigger ideas. Many have long complained about the dominance of OBR forecasts, and one Labour MP — just before the leak — complained that “putting the OBR on a pedestal” makes the problems of short-termism even worse. 

Others wonder about having a big bang budget at all, given it leads to months of speculation, market fluctuations and leaks. One veteran MP wondered aloud on Wednesday night: “Isn’t there another way we can do it in 21st century Britain?”

Then, finally, there is the question of what sort of chancellor Reeves will be; tax-raising, redistributive and pouring funding into public services, or slashing regulation in the name of growth. She insists she can be both, but her critics — especially among conservatives — believe she has gravitated to the former.

While Britain’s growth projection was revised up to 1.5 percent in 2025, it was revised down for every future year. Inflation is now projected to fall to the Bank of England’s 2 percent target only in 2027, a year later than previously thought. And while real spending on government departments will continue to rise, the increase slows down from 4 percent in 2025/26 to 0.7 percent by the end of the decade.

“Britain remains in a bind,” Ruth Curtice, chief executive of the Resolution Foundation, an economic think tank, told POLITICO. “On the one hand, the political system continues not to have a serious conversation about how to pay for an aging and ailing population. On the other, both parties have now significantly raised personal taxes.”

Adrian Pabst, deputy director of the National Institute of Economic and Social Research, a nonpartisan research institute, added: “While [Reeves] has built a larger fiscal buffer against shocks, it’s not clear how her budget will raise economic growth based on higher business investment.

“Higher tax, higher spend, no significant reduction in the ballooning welfare bill and no path of people who are inactive into work. There is as yet no clear bold plan to get the UK economy firing on all cylinders.”

Reeves perhaps put it best herself, surrounded by nurses in a small room in London’s University College Hospital. “If you are asking, is this a budget I wanted to deliver today? I would have rather the circumstances were different,” she told journalists. “But as chancellor, I don’t get to choose my inheritance, and I have to live in the world as it is.”