This was a big first Budget from Rachel Reeves and a big rebalancing of Government priorities. Taxes were raised significantly – by an average of £35 billion a year from April onwards – but spending has gone up by significantly more, at an average of £70bn. This means that borrowing is up by an average of over £30bn in every year of the forecast.

In the short-term, the Chancellor has opted to borrow an extra £20bn, allowing spending to rise in-year to combat the short-term pressures and public sector pay decisions she highlighted back in July. 

Over the longer run, capital spending in particular has been raised by a lot, and we’ll need to wait to see how much of it is delivered – governments being notorious for finding it difficult to disburse large step-changes smoothly.

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How does she make this add up? It’s all to do with the changing of the fiscal rules. If she’d maintained the underlying debt rule, she’d have broken it by £6bn. She also leaves less headroom against the current budget surplus than Jeremy Hunt had, and spent three-quarters of her newly found headroom in the debt measure. 

With such little room to manoeuvre, if many of the highly uncertain revenue raisers don’t bring in as much money as forecast, it’s not certain at all the Chancellor will meet these new rules.

For Scotland, there has been a really significant uplift in spending – largely through the Barnett formula due to higher spending in devolved areas. 

Funding for day-to-day spending is £1.5bn higher this year, which is likely to make the Scottish Government’s job of balancing its budget significantly easier. Barnett consequentials are £3.4bn next year as well, of which £2.8bn is day-to-day spending. 

But although that is a significant amount, several hundred million of that will be compensation for higher staff costs through the NICs measure for public sector employers – so even though it’s a significant amount, it’s a bit less than would initially appear. We’re not yet clear on what this will mean for local government.

Government spending as a share of the economy (GDP) is set to inch up from 44.9% to 45.3% this year, before easing slightly to 44.5% by 2029-30— 4.9 percentage points higher than pre-pandemic levels.

This initial increase is driven by added funding for specific programs, such as compensation schemes (infected blood and Post Office Horizon), and rising debt interest costs. 

Over time, a gradual decline reflects slower growth in departmental budgets and reduced spending on pensions and student loans. Interest and welfare spending are expected to stay steady.

During the speech, the Chancellor announced that she’d be holding the Budget every year in the Autumn – and we hope that such a commitment also means a single fiscal event a year, to stop tinkering impulses.

Devolved administrations will be very glad to hear this. Their own budgets depend on decisions taken at the UK Budget, and moving the main fiscal event to before the devolved budgets are presented and scrutinised will give them more certainty and the ability to plan and take meaningful decisions. It also improves Parliamentary scrutiny all around by increasing time for it, and avoids perverse incentives when “March surprises” come after devolved administrations have already had to fix their upcoming year’s budget.