London Daily

Focus on the big picture.
Tuesday, Mar 31, 2026

There's a feel-bad factor coming, and this budget won't help

There's a feel-bad factor coming, and this budget won't help

It may have been a return to normality after the shocks of the last few years, but today's measures will not remedy the enormous problems facing Britain.

We'll get to the economics in a moment but let's reflect first of all on perhaps the most remarkable thing about this budget. Which is that this was, just about, a "normal" budget - the first "normal" budget in three years.

Think about it: first, there was COVID, during which the normal rules about economic policymaking dissolved away. Enormous giveaways (most obviously the furlough scheme) took place on the hoof, accompanied by few figures and no red book.

Then came Liz Truss's astounding mini-budget and Jeremy Hunt's equally surreal autumn statement which essentially undid everything that came before it.

Tot it all up and we haven't had anything resembling regular fiscal policy - which is to say six monthly sets of strategic tax and spending changes accompanied by robust, detailed economic analysis - for a long time. If today's event felt somewhat boring, it was in part because what came before it was so intense.

The big picture for the UK economy is a little bit better than last time around.

That might sound encouraging, until you recall that the outlook last time around was utterly grim: the worst two years for household disposable income in modern record; an enormous squeeze in the cost of living, augmented by a rise in certain taxes as the government sought to repair the mess of the mini-budget.


On the basis of today's budget, the UK should just about skirt clear of a technical recession (two successive quarters of contraction), but will do little more than flatline for most of this year.

Household disposable income will not contract by as much as expected last time around, but this year and next will still be the worst for families' finances since at least the 1950s. Things are looking better, but still bad.

Nor is there much sign that the measures contained in today's budget will move the dial that much. In one respect this is a little strange since many of the measures here might be considered textbook "pro-growth".

There's the increase in provision of childcare, which should help encourage more young parents back into the workforce.

There's the increase in the pensions lifetime allowance which should help encourage well-off older workers to get working again.


Then there's the biggest of all the measures - full expensing, whereby businesses can offset their investments against their tax bills. This is precisely the policy business groups have been calling for for years, claiming it would boost investment and hence drive forward productivity.

Yet tot up all these measures and, according to the Office for Budget Responsibility, they raise economic growth by a measly 0.3 per cent at their peak, before dropping back eventually to zero.

Part of the reason is that some of these policies are time-limited - most notably full expensing which is technically only due to last for three years. The Treasury says it wants it to be permanent, only at the moment, it can't quite afford it.

That's not, it should be said, because of any concrete limitation on its ability to spend but because of its self-imposed fiscal rules, which are far less of a constraint than you might imagine.

Anyway, the upshot is that the OBR thinks the growth boost delivered by all this effort is quite small.

Then again, the OBR's forecasts are considerably more optimistic than the Bank of England, which thinks that far from rebounding rapidly, the UK is likely to see economic growth flatline for the coming years, barely making good any of the income foregone in recent years.

Put it all together and it's hard not to conclude that this was primarily a technical budget.

There are bits and pieces in there for households - the retention of the £2,500 energy price guarantee level, the childcare provisions and the pension tax-free allowance (primarily for the better-off) - but it's hard to see how any of this can remedy the enormous financial crunch most households are going to face in the coming months.


They will see inflation continuing to bite, they will feel the impact of higher interest rates and they will see ever greater chunks of their income going to the exchequer (as a result of the freeze in tax-free personal allowances announced last autumn).

It is the opposite of the "feel-good factor" - the feel-bad factor.

And the budget did nothing to remedy this. It did nothing to remedy the problems young people face in trying to get on the housing ladder. It did nothing to provide a coherent response to Joe Biden's Inflation Reduction Act.

Then again, there are still two big fiscal events left before the likely date of the next election, late next year. If there's a splurge coming it's likely to happen then.

Newsletter

Related Articles

0:00
0:00
Close
Russia Expels British Diplomat as UK Pushes Back Against Pressure
White House App Faces Scrutiny After Claims of Continuous User Location Tracking
BBC Faces Scrutiny Over Allegations of Paid Content Linked to Saudi Arabia
UK-France Coastal Patrol Agreement Nears Breakdown Amid Migration Pressures
UK Police Detain Pro-Palestine Activist Again Weeks After Bail Release
FTSE 100 Advances as Energy and Mining Shares Gain Amid Middle East Tensions
Eli Lilly Seeks UK Pricing Deal to Unlock Renewed Pharmaceutical Investment
Three Arrested in UK After Massive Cocaine Haul Discovered Hidden in Banana Shipment
UK Fuel Prices Poised for Further Surge Amid Global Energy Pressures
Apple Subsidiary Penalized by UK Authorities for Breach of Moscow Sanctions
Western Allies Intensify Coordinated Sanctions Strategy Against Russia
UK Lawmakers Face Criticism Over Renewed Push for Social Media Restrictions
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
UK Housing Divide Deepens as Older Owners Hold Wealth While Under-30s Face Mounting Barriers
London Demonstration Calls on UK to Recognize Iranian Opposition’s Provisional Government
UK Green Party Vote on ‘Zionism is Racism’ Motion Collapses Amid Internal Disputes and Technical Failures
SNL UK Ignites Debate with Sharp Royal Satire Targeting Prince Andrew and Prince William
EU Proposes ‘Emergency Brake’ to Resolve Deadlock in UK Youth Mobility Talks
Thousands Rally in London to Oppose Rise of Far-Right Movements
Hong Kong Official Rejects Allegations of Surveillance Orders Targeting UK-Based Dissidents
PayPal Expands Cryptocurrency Services to Allow UK Users to Buy and Sell Bitcoin
UK Minister Challenges Reform Party’s ‘Pro-Family’ Agenda as Debate Intensifies
Concerns Grow Over Meningitis Risk Among UK Students Amid Warning Signs of New Outbreaks
Japanese Grand Prix 2026: Schedule, UK Start Times and Full Broadcast Details
Electric Vehicles Seen as Strategic Solution to UK Fuel Reserve Concerns
Rise of Lone-Actor Threats and Online Radicalisation Drives New Wave of Antisemitic Attacks in the UK
Canada Advances Plan to Ban Cryptocurrency Donations in Election Campaigns
UK Faces Looming Medicine Shortages as Iran Conflict Threatens Supply Chains
Deadly Meningitis Outbreak in the U.K. Highlights Urgent Need for Vaccination
Fresh Claims Emerge Over Harry and Meghan’s Australia Visit as Insider Speaks Out
NATO Assessment Indicates UK Defence Spending Has Fallen Below Alliance Average
FTSE 100 Slips as Middle East Tensions Weigh on Investor Sentiment
UK Economy Begins to Feel Early Impact of Iran Conflict as Policy Challenges Intensify
Russian National Jailed in UK After Assault Case Linked to Barron Trump’s Alert
Energy Price Surge Accelerates Shift Away from Fossil Fuels in UK Homes
UK Museums House More Than 260,000 Human Remains, New Report Reveals
Surging UK Gilt Yields Reflect Inflation Pressures and Fiscal Uncertainty
UK Issues Updated Guidance on Children’s Screen Time with Focus on Balance and Wellbeing
UK Migration Figures Show Shifting Trends Across Asylum, Visas and Channel Crossings
UK Watchdog Launches Probe into Five Firms Over Alleged Fake Reviews and Ratings
Jaguar Land Rover Halts Production at UK Plant Amid Supplier Disruption
UK Police Reverse Position, Confirm Arrests Will Resume for Palestine Action Protests
UK Small Businesses Face Europe’s Steepest Cost Pressures, New Survey Reveals
US Envoy Urges UK to Proceed with King’s Visit Amid Diplomatic Sensitivities
FTSE 100 Drops Over One Percent as Middle East Tensions Weigh on Markets
UK CO2 Plant Set to Reopen as Authorities Move to Safeguard Supplies Amid Middle East Tensions
×