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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
When Rachel Reeves stands up in the House of Commons on October 30 to deliver her Budget, she faces a formidably difficult task.
The UK chancellor must juggle the competing aims of attracting investment and spurring growth with the necessity of raising taxes to help repair the public finances — all without spooking the markets.
Fortunately, Financial Times readers have gone before her — with mixed results.
Decisions made in the FT’s Budget Game, where players concoct a strategy to relaunch the UK economy while controlling public debt, show just how contentious the package could turn out to be.
The idea is to bring to life the difficult trade-offs that any UK chancellor would currently face. And getting the fiscal balance right is proving very tricky.
For example, just over half of players have so far opposed means testing winter fuel payments, the contentious measure that Reeves announced within days of entering the Treasury in July.
There is clearer support for her signature pledge to rule out an increase in national insurance on “working people”. More than 60 per cent of players opposed a reversal of the cuts to employee national insurance made by Reeves’s Tory predecessor Jeremy Hunt, even though the move would raise about £22bn to curb the deficit.
But players have strongly opposed an extension in the lucrative freeze on personal tax thresholds, a policy that is tempting Reeves given the extra £7bn of annual revenue it would bring in. Nearly three-quarters declined to prolong the freeze for another two years.
Many players fell foul of the fiscal rules that require the chancellor to balance the current deficit and bring down the debt-to-GDP ratio, given their goals of improving public services.
Keeping within the rules is a key requirement for Reeves to pull off her Budget without alarming international investors.
An easing of the debt rule to enable more investment undoubtedly helps matters — as players can see on their results screen — but it only goes so far.
Alongside tough decisions on tax, welfare and military funding, players of the game — which the FT began working on with the Resolution Foundation think-tank before the general election — are given a choice of three voter-pleasing “rabbits from a hat” they can produce in the run-up to Budget day.
The most popular one has been extending free school meals to all primary school pupils. But as the game makes clear, there is precious little room for giveaways given the straitened budgetary times the UK is experiencing.
Can you do a better job than Rachel Reeves? Step into the chancellor’s shoes and find out. Let us know how you get on in the comments below.
