{"id":17548,"date":"2025-12-08T18:49:45","date_gmt":"2025-12-08T18:49:45","guid":{"rendered":"https:\/\/sceptical.scot\/staging\/?p=17548"},"modified":"2025-12-08T18:49:48","modified_gmt":"2025-12-08T18:49:48","slug":"uk-budget-2025-get-real-the-world-has-changed","status":"publish","type":"post","link":"https:\/\/sceptical.scot\/staging\/2025\/12\/uk-budget-2025-get-real-the-world-has-changed\/","title":{"rendered":"UK Budget 2025? Get real. The world has changed"},"content":{"rendered":"\n

The National Institute of Economic and Social Research (NIESR) put is it as well as anyone. \u201cToday\u2019s Budget locks in a high-tax, high-debt steady state in a world of low productivity growth and higher interest rates. Even the historically large tax share of GDP now planned is only just enough to stabilise \u2013 not reduce \u2013 a debt ratio stuck around 100 per cent of GDP for the foreseeable future.<\/em>\u201d\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n

Strewth, what are we gonna do now? Get real maybe?<\/p>\n

Getting real means acknowledging that the world has changed and then deciding how we want to react to that change.<\/p>\n

The first, and biggest, change is the fall in annual economic growth, largely through a drop in productivity. This has been going on for some time now and the Office for Budget Responsibility (OBR)\u2019s downwards revision was a much overdue acknowledgement of the fact. (As an aside, I suspect that the OBR decided to make the adjustment now because it was politically too awkward to do so around last years election and the, counterbalancing, wage related revenue upgrade provided them with a neat way out.)<\/p>\n

There is no easy or obvious way to increase the economic growth rate. Such a decline has been replicated in most countries, as last week’s OECD Economic Outlook highlighted. Furthermore, and yet again, the OBR’s analysis suggested that the policies implemented in the Budget had next to no impact on economic growth, which the UK Government would have been informed of in advance.<\/p>\n

And if we couldn\u2019t reinvigorate economic growth when debt was below 50% of GDP, and there were options for both cutting taxes or raising spending, then there is even less chance now that such options are essentially off the table.<\/p>\n

So seeking faster growth is, at present, simply pursuing a mirage on the horizon.<\/p>\n

Covid left us poorer, weaker and no wiser<\/h2>\n

The second big change that keeps being ignored is that COVID left us: in debt; with badly stretched services; and with lingering mental and physical issues that feed into both of the preceding.<\/p>\n

The current approach of maintaining, as best is possible, the old system is clearly failing but most\u00a0\u00a0of the hard decisions on prioritisation and targeting of funds are still being dodged.<\/p>\n

This has led to the continuation of unaffordable policies \u2013 like the pension Triple Lock and the repeated failure to raise Fuel Duty in line with inflation \u2013\u00a0 as well as the avoidance of future funding challenges. The latter include: restoring the ODA budget (official development assistance<\/a>); raising defence spending; properly funding local government; and a ballooning overspend associated with the special educational needs and disabilities (SEND) system.<\/p>\n

Then there are the high priority, longer term, issues that are currently being neglected or underplayed, including: an energy network that is expensive and incoherent; a transport infrastructure system in limbo – witness HS2; meeting ambitious global warming targets; and adjusting to an ageing society.<\/p>\n

\n

There is not a hope in hell of getting any of this sorted out while, at the same time, existing budgets for the NHS, the Courts system, care for the elderly and for those with high needs are insufficient to even return them to a pre COVID level of service.<\/p>\n<\/blockquote>\n

Eroding trust in mainstream politicians<\/h2>\n

All of this is why the Budget was such a disappointment, because it did nothing at a time when so much needs to be done.<\/p>\n

Why is it so difficult for the need for change to be accepted? Because no political party wants to set out its stall along the lines of \u2018we are the best party to manage the decline in economic growth and to decide which services and benefits need to be cut back, in order to live within our means and to start to reduce debt<\/em>\u2019.<\/p>\n

But that is where we are. Labour, Starmer and Reeves have ably demonstrated how repeatedly avoiding the new reality leads to broken promises, confused policy making and barefaced lies (or misleading statements in political parlance).<\/p>\n

\n

This further erodes trust in mainstream politicians and pushes voters towards outlying political parties. So far Reform are the chief beneficiaries, but their appeal is based on even wilder policy promises which are destined to fail on an even grander scale.<\/strong><\/p>\n<\/blockquote>\n

Unfortunately, no party is competing with Reform by being honest about the current state of affairs. Maybe if they did they would garner additional support. It\u2019s difficult to see how some of their polling numbers could get much worse.<\/p>\n

As for Scotland?<\/h2>\n

In recent weeks there have been three highly critical reports on the SNP\u2019s failure to deliver (Anton Muscatelli on regional economy,<\/a> Jim Gallagher on governance and Audit Scotland on the NHS<\/a>). Of these, the Gallagher report was probably the most damning, especially since much of it consisted of critical comments made in interviews with key players and civil servants. As James Mitchell pointed out<\/a> in his Sceptical Scot review, these comments highlighted the cavern like gap between grand policy announcements and poor implementation and delivery of said policies.<\/p>\n

The Scottish Government seems to care little about achieving previously set targets before moving on to the next \u2018brave new future\u2019 declaration.<\/p>\n

And yet\u2026 recent polls show support for the SNP remaining at a level that makes it the most popular party in Scotland. The SNP appears to have pulled off the political trick of staying in power even as it consistently fails to deliver – a combination mercilessly punished elsewhere. Or is it that the electorate simply see the alternatives as even more dismal a prospect than sticking with an uninspiring incumbent? Probably, for now.\u00a0<\/p>\n

With the Scottish Government having a dire track record in facing up to difficult economic and public service decisions, and no great electoral motivation to do so either, then prospects for serious change are vanishingly poor.<\/p>\n

Roll on the Scottish Budget and Spending Review on the 13th January.\u00a0<\/p>\n

I feel a Morrissey lyric coming on\u2026.<\/p>\n

Featured image: Le Passe-Muraille, Montmartre \u2013 detail from scullptor Jean Marais tribute to Marcel Aym\u00e9\u00a0 story The Man who Walked through Walls [photo Fay Young]<\/em><\/p>\n

\u00a0<\/p>\n\n\n","protected":false},"excerpt":{"rendered":"

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