4th November 2025
Reeves Unsurprising Surprise Speech
- Just over three weeks until the Budget and the Chancellor has decided she can’t wait any longer. The pitch must be rolled.
- The public, and more importantly Labour MPs, must be made acutely aware that there is no alternative to tough decisions. Manifesto pledges will have to be ripped up. Taxes will rise.
- Or, as she put it in today’s speech:
- “We will bear down on waiting lists, on the cost of living, and on the national debt which compound these challenges… and when that requires hard choices, we will act – guided by the interests of working people. We were elected on a commitment to put country before party; the national interest before political calculation… and, whatever challenges come our way – whatever challenges come my way – we will not be swayed from that.“
- She characterises the challenges as poor productivity caused by Conservative austerity / Brexit / “the chronic stop-go cycle of public investment” along with “heightened global uncertainty” as “The continual threat of tariffs has dragged on global confidence”.
- The solution will touch everyone:
- “we will all have to contribute to that effort… each of us must do our bit for the security of our country and the brightness of its future“.
- And this speech was designed to explain the priorities for her decisions in just over three weeks’ time:
- “We will bear down on waiting lists, on the cost of living, and on the national debt which compound these challenges“
- This all sounds eminently sensible.
- It was a greatest hits, heavily borrowing from political ideology as she outlined in her pre-election Mais Lecture, which even contained the line “No one election will wipe that inheritance away. We must face the world as it is not as we would have it be”.
- The trouble is that there has been eighteen months of a Labour governemnt and she promised she wouldn’t have to come back for more.
- Doubling down on her narrative and barrelling through critical questions from the media speaks of a person hunkered down in their own denial, desperate to ensure they keep their job.
- And by making the speech, it brings forward the key political challenge for the government:
- It cannot please markets, the public and Labour MPs.
- Gilt markets will feel reassured that manifesto pledges have been jettisoned to ensure borrowing remains under control.
- But the public will not look kindly on breaching manifesto pledges, particularly ones that raise their taxes.
- And it will bring forward recessionary tendencies as consumers postpone spending in anticipation of tighter purses.
- It cannot please markets, the public and Labour MPs.
- As Labour fall in the opinion polls and growth stutters, the internal split within the party will be brought out into the open:
- The left will argue for even more wealth taxes and spending
- The centrists will argue for spending restraint and being friendly to business
- All that Reeves’ speech has done is bring forward this debate.
- Whilst a laudable attempt to regain the initiative, it means the last three weeks of Budget negotiations will be even more fraught.
- But the timing should allow the Bank of England to cut rates this Thursday as tighter fiscal policy lies ahead and also enable Reeves to persuade the OBR that planning reforms etc will be passed and thus boost growth
- Reeves is once again doubling down having backed herself into a corner.
- Putting your head above the parapet means you will have to take incoming fire.
- This time the gamble will not pay off when it comes to her and Starmer’s political future.
