UK Chancellor Rachel Reeves has rolled out some pretty audacious new interventions in her recent budget. Together, these initiatives directly address inflation and help make it more affordable for families to pay their bills. One main takeaway is that extending the 5p cut in fuel duty for another year until September 2024. She thinks this step will be instrumental in curbing escalating expenses.
These actions come as the UK faces a deeply concerning inflation rate of 3.5%. For instance, the OBR forecasts expect that inflation will drop to 2.5% next year. They expect that it will only hit the Bank of England’s target rate of 2% by 2027. By enacting these policies, Reeves hopes to alleviate the cost of living concerns that most families today are feeling.
Reeves’ budget includes a fuel duty cut and price caps on fuel. It further lowers their energy cost and freezes rail fares until March 2027. Usually, rail fares go up every January according to the retail price index (RPI), plus one per cent. Still, this freeze is hugely important – it’s a major step towards stopping skyrocketing transportation costs from climbing even higher.
Reeves’ strategy is not without its critics. Her department head, Kemi Badenoch, Secretary of State for Business and Trade, has already spoken out publicly against the budget. She contends that it will, in the end, produce even more inflation. She is right in claiming that her tax and spend decisions have stoked inflationary pressures. This emphasizes her fears about the bottom line cost of Reeves’ proposals.
The budget supports future long-term economic prosperity. It estimates that these reforms could add an additional 0.2% to GDP by 2027. All these steps show that Clare Lombardelli, a top economist with the U.S. By her estimate, these actions will start to slow price increases starting in April of 2026.
The budget announces cool plans for new road charging. Rates for electric cars will be 3p per mile, with plug-in hybrids charged 1.5p per mile beginning in April 2028. These fees will be subject to an annual indexation based on inflation.
“stoked by her tax and spend decisions” – Kemi Badenoch