Budget politics and the art of expectation management

In a move that breaks with convention, Chancellor Rachel Reeves delivered a televised address from Downing Street this morning, 22 days ahead of her first budget. It was not, as she made clear, “about setting out the policies, but setting out the context”. And the context Reeves is preparing us for looks pretty bleak.

With the Budget still weeks away, this was not a budget speech so much as a prelude, designed to soften the ground ahead of what is widely expected to be a tough fiscal statement on 26 November. The Chancellor’s message was clear: the economic inheritance is worse than feared, and the choices ahead will be “tough but fair”.

Reeves’ early morning address, timed just after markets opened, was a departure from the usual rhythm of budget build-up and signals a government acutely aware of the political stakes. With the Office for Budget Responsibility (OBR) expected to downgrade productivity forecasts and borrowing costs rising, the Chancellor is preparing the public for what she called the “necessary choices” to “deliver strong foundations for our economy”.

She spoke of “fairness and opportunity”, of “protecting our NHS”, “reducing our national debt”, and “improving the cost of living”. But while the language was rich in values and rhetoric, it was light on specifics or detail. Reeves made no direct mention of tax rises, but the subtext was unmistakable. Her emphasis on avoiding austerity, combined with a refusal to increase borrowing, leaves only one lever to pull.

The Resolution Foundation estimates Reeves may need to raise up to £26 billion, even under relatively optimistic fiscal assumptions. That could mean a 2p rise in National Insurance, further freezes to income tax thresholds, or other personal tax measures. The Chancellor’s framing is that these are the “important choices” needed to secure the country’s future. Using this kind of language and making this speech so far in advance of the budget itself, Reeves seems to be aiming to make the pain more politically palatable.

However, in the absence of hard figures, the politics of this speech becomes the main story. Reeves’ intervention is best understood not as a policy announcement, but as a strategic act of expectation management in a bid to control the narrative before the numbers land.

She is not alone in this attempt. Just yesterday, Nigel Farage took to the stage with his own pre-budget pitch, pledging that Reform UK would not raise taxes. This was already a departure from Reform’s pledges before last year’s general election, which included slashing corporation tax, cutting stamp duty on home purchases and lifting the threshold when people start paying income tax. However, he has now said that “substantial tax cuts” were not currently “realistic” with the state of the UK economy. 

For Farage, the reality is beginning to contradict the rhetoric. Reports show that Reform-run councils have proposed council tax hikes totalling £127 million, affecting nearly two million households. It is a move that directly contradicts Farage’s national message and raises questions about whether his tax pledges are more about political branding than fiscal reality.

Farage has also floated controversial ideas such as cutting the minimum wage for young people, which is a proposal that may appeal to some business interests but risks alienating working-class voters. His speech, like Reeves’, was less about policy detail and more about political positioning. Both are trying to shape the public mood ahead of the budget.

Taken together, these speeches form a kind of pre-budget miniseries, where the major political players are competing to define the terms of the debate before the Chancellor’s red box is even opened. For Labour, it is about credibility and control, particularly as they seem to prepare to go against their general election manifesto pledge to not raise taxes. For Reform, it is about contrast and populist appeal.

But in both cases, the substance is secondary to the political positioning. Reeves’ message was not about what she will do, but why she must do it. Farage’s was not about how he would fund services, but about his contrast to Reeves, pitching his party as one without tax rises.

As Keir Starmer told Labour MPs last night, “The budget will be a Labour budget built on Labour values”. But values alone will not balance the books and with the fiscal outlook tightening, the politics of perception seems to be the most valuable currency of all.