Rachel Reeves' latest Budget, which included a significant £30 billion tax package, has been widely dismissed by leading economists and provoked strong reactions from various sectors. The Institute for Fiscal Studies (IFS) director, Helen Miller, challenged Reeves' assertion that she had no choice but to implement tax rises, insisting that the Chancellor made a deliberate 'decision' to increase taxes to fund higher spending and build fiscal headroom. This assessment came despite the Treasury's own watchdog concluding that 'no fiscal repair job needed' was required, highlighting the 'bleak prognosis' for household incomes over the current Parliament.

The IFS critically labeled Reeves' strategy as 'fiscal fiction,' particularly due to her backloading of tax increases and spending cuts to commence just before the next general election in 2029. This approach is seen as a high-risk strategy, requiring 'near-heroic restraint in an election year' and potentially forcing Labour to abandon some measures. By 2029, the extension of the income tax and national insurance threshold freeze is projected to pull more than a quarter of all taxpayers into higher income tax brackets. The IFS estimated that by the new end date of the tax thresholds freeze in 2030-31, 4.8 million more people will be in the higher rate than was the case in 2022, with a million of these directly attributed to Reeves' three-year extension of the freeze. Basic-rate taxpayers could face an additional £220 annually by 2029, while higher-rate payers could see an increase of £600.

Adding to the controversy, the Budget's small print revealed a tax break for rich former non-doms, capping inheritance tax on their global wealth held in trusts at £5 million every decade for offshore trusts created before the abolition of non-dom status. This measure, estimated to cost the exchequer £30 million, primarily benefits individuals with over £83 million in trust, drawing criticism for being a 'giveaway' to the ultra-wealthy.

The education sector reacted with alarm, as Rachel Reeves' Budget provided no additional funding for schools beyond modest allocations of £5 million for secondary school libraries and £18 million for playgrounds. Britain's largest teaching union, the National Education Union (NEU), has threatened strike action, unwilling to accept 'continued underfunding' or 'another pay cut.' Schools are concerned about a potential 4.9 percent drop in funding, equivalent to roughly £400 per pupil annually, should the government absorb spiraling Special Educational Needs and Disabilities (SEND) costs from core school budgets. The Office for Budget Responsibility (OBR) warned that this shift, intended to relieve local councils facing financial collapse due to exploding autism and ADHD diagnoses, found no savings to offset the estimated £6 billion cost. The Department for Education, however, maintains that any deficits will be absorbed within the overall Government budget, and that these projections do not account for much-needed SEND reforms.

Reeves' fiscal strategy, described as a 'borrow-to-spend Budget in the short term, and a combination of a tax-and-spend and tax-and-bank-it Budget in the medium term,' aimed to increase the Chancellor's headroom from £10 billion to approximately £22 billion. While the OBR downgraded productivity forecasts, it took a more optimistic view of tax revenues, leading to a minimal overall forecast downgrade. However, the IFS expressed doubts that the government could maintain the implied 'unrealistically low' spending plans in the run-up to an election.

Public reaction, as observed in focus groups, revealed a sense of disappointment and frustration. Many voters, including those in relatively high-paid jobs who supported Labour in the last election, felt let down, describing the budget as a 'damp squib' and the lead-up as 'chaotic.' The freeze on income tax bands was perceived as 'sneaky' and 'underhanded,' despite some acknowledging the difficult task the Chancellor faced. Concerns were also raised about the new tax on electric vehicles and the impact of the two-child benefit cap. The general sentiment was one of impatience, with a feeling that the government was merely 'tinkering around the edges' rather than tackling significant cost of living issues, leading to doubts about its overall competence and capacity for change.