Denis Healey, a Labour chancellor, advised that when in a hole, one should stop digging. The failure to observe this iron law of politics is behind the sense of constant crisis engulfing Rachel Reeves. The current chancellor’s problem is one of her own making. She designed her fiscal rules with so little wriggle room that even small changes in economic forecasts – such as revisions to GDP – mean that her numbers stop adding up. That, in turn, starts chatter about budgetary “holes” and the need for tax rises and spending cuts – despite no change in the economy.
In politics, as in digging, it helps to know when to put down the spade. Ms Reeves could end this drama by relaxing her fiscal rules. Or better still, replacing them, as the economist Tim Leunig suggested, with a 250-word summary of Britain’s economic position at the budget, and the effect of the government’s proposals. Instead, she has framed her decision to break an election promise not to raise income tax as unavoidable. She told BBC radio: “It would, of course, be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending.” But this is not true. She’s blaming her rules for cuts they don’t require.
