U.K. Budget Calms Markets, But Starmer’s Popularity Still Uncertain

London, U.K. – The U.K. government’s latest budget, unveiled Wednesday by Chancellor of the Exchequer Rachel Reeves, offered a mix of tax hikes and spending increases aimed at stabilizing the economy and addressing social inequality. While markets and Labour MPs responded positively, political analysts question whether the plan will help Prime Minister Keir Starmer win back public confidence.

Reeves’ budget included higher taxes on wealthy and middle-income citizens, a new mansion tax on properties over £2 million, and tweaks to inheritance tax rules. On the social side, the budget removed the cap on child tax credits, potentially lifting 450,000 children out of poverty by 2030, and eliminated the so-called “rape clause” for tax credit claims—a move Labour lawmakers hailed as a major moral and political victory.

“The chancellor has placated all the right people without changing the narrative of how voters perceive this Labour government,” said Professor Steven Fielding, a political historian at the University of Nottingham. “It may not translate into electoral gains.”

Markets responded favorably, with the pound rising against the dollar and government borrowing costs declining, signaling relief after previous turbulence. Labour MPs, often frustrated with policy reversals in the party’s first 16 months in office, welcomed the plan as a temporary reprieve.

Yet critics were swift. Conservative leader Kemi Badenoch called the budget a “total humiliation,” demanding Reeves’ resignation, while Reform U.K. leader Nigel Farage labeled it an “assault on aspiration and saving,” claiming working people would shoulder the burden for expanded welfare programs.

The budget rollout was further complicated by a premature release of the full plan by the Office for Budget Responsibility, prompting fluctuations in government bond yields and adding to the perception of chaos.

Analysts note that while the budget strengthens Labour’s credibility among party faithful, it does little to sway the wider electorate. With Starmer trailing Reform U.K. in opinion polls and facing low approval ratings, domestic economic gains may be overshadowed by broader political challenges.

Despite this, the visual of Starmer and Reeves united at the budget announcement signals a strategic partnership. Historically, the relationship between prime ministers and chancellors has proven crucial: from the synergy of Blair and Brown to the tension between Thatcher and Lawson, the dynamics can shape a government’s fortunes.

For now, the budget is seen as a short-term success, calming markets and reassuring Labour members, but the long-term political impact remains uncertain, especially if economic or external shocks disrupt Britain’s fragile growth.