Best and Worst UK Budgets in History

How Britain’s Big Fiscal Moments Changed the Economy

Every new UK Budget now lands in the shadow of two moments: Gordon Brown handing the Bank of England control of interest rates in 1997, and Kwasi Kwarteng’s mini-Budget crashing the gilt market in 2022. One move built decades of credibility. The other shook it in a matter of days.

With investors scrutinising every line of Rachel Reeves’s tax-heavy plans and the Bank of England building new tools to calm future gilt panics, the question of what makes a “good” or “bad” UK Budget is more than academic. It goes straight to mortgage costs, pension safety, and whether markets trust Britain to balance growth with stability.

This article looks at how economists and historians tend to rank the best and worst UK Budgets since the Second World War. It explains why Brown’s first Budget is often held up as a model, why the 2022 mini-Budget is already a by-word for failure, and how other famous Budgets from the 1950s, 1970s and 1980s fit into the story. By the end, the main criteria that define “good” and “bad” Budgets – credibility, fairness and long-term impact – become much clearer.

Key Points

• A handful of UK Budgets stand out as turning points, reshaping economic strategy for years rather than months.

• Gordon Brown’s 1997 decision to grant the Bank of England operational independence is widely regarded as one of the most successful modern fiscal–monetary moves.The Guardian+2Research Briefings+2

• The September 2022 mini-Budget under Liz Truss and Kwasi Kwarteng is widely seen as the worst in recent history, triggering a gilt market crisis and rapid policy reversals.duttonmoore.co.uk+3Trustnet+3Professional Pensions+3

• Earlier “dash for growth” and giveaway Budgets in the 1950s and 1970s delivered short booms but fed inflation, balance-of-payments trouble and later austerity.The Independent+1

• Modern Chancellors operate under tighter fiscal rules, independent forecasting from the OBR and a gilt market still sensitive after 2022, which limits room for surprises.Reuters+3Institute for Fiscal Studies+3House of Commons Library+3

• For households and businesses, the difference between a good and bad Budget shows up in mortgage rates, service quality, tax complexity and the safety of pension promises.

Background

Since 1945, the UK Budget has evolved from a largely domestic political set-piece into a global market event. It is no longer just about the Chancellor’s red box and a few headline tax changes. It is a statement of how Britain plans to manage debt, growth and public services under the scrutiny of bond markets, ratings agencies and international investors.

In the post-war decades, Chancellors frequently practised what became known as “stop–go” policy. Tax cuts and spending increases would be used to boost growth and employment, only to be followed by emergency tax rises or credit squeezes when inflation, imports and the balance of payments deteriorated. Rab Butler’s 1953 and 1955 Budgets, celebrated at the time for cutting income tax and stimulating demand, later became textbook examples of this pattern.The Independent+1

The 1972 Budget from Anthony Barber under Edward Heath marked another turning point. Designed as a dramatic “dash for growth” with large tax cuts and stimulus, it helped to trigger a wage–price spiral and high inflation that scarred the decade and set the stage for the 1976 IMF crisis. The episode convinced many economists that fiscal over-reach could be as dangerous as under-spending.

The 1980s brought a different experiment. Geoffrey Howe and Nigel Lawson used Budgets to push a free-market agenda: tight monetary policy, privatisations and significant income tax reform. Lawson’s 1988 Budget simplified the system and slashed top tax rates, but it also poured fuel on an already strong upswing, feeding the “Lawson boom” and a later housing bust.

By the mid-1990s, after the ERM crisis and early-90s recession, Kenneth Clarke’s Budgets restored relative calm, delivering falling inflation and a shrinking deficit. New Labour then changed the institutional rules. Brown gave the Bank of England operational independence and later helped create the Office for Budget Responsibility (OBR), embedding independent forecasting and a more rules-based approach to fiscal policy.Office for Budget Responsibility+4The Guardian+4Research Briefings+4

After the 2008 financial crisis, Budgets revolved around austerity, deficit reduction and slowly rebuilding fiscal space. That trajectory was broken by the pandemic, which saw unprecedented borrowing, and then upended by the 2022 mini-Budget, when markets suddenly lost confidence in the UK’s fiscal path.

Analysis

What Makes a “Good” UK Budget?

In hindsight, the Budgets that age well tend to score highly on three axes:

1. Credibility
   Markets and the public believe the numbers, trust the forecasts and accept that the plans add up. External anchors like Bank of England independence and OBR scrutiny help here.

2. Stability
   The Budget supports low and stable inflation, predictable tax policy and a clear path for debt. It does not force an emergency reversal months later.

3. Fairness and effectiveness
   Distributional choices feel broadly defensible, and the measures actually support growth, investment or public service improvement rather than just short-term headlines.

Gordon Brown’s 1997 Budget and surrounding decisions tick many of these boxes. He moved control over interest rates to the Bank of England, clarified fiscal rules and signalled a cautious approach to spending in the early years of New Labour. That combination is often credited with underpinning a long stretch of low inflation and steady growth before the global financial crisis.The Guardian+2Bank of England+2

By contrast, Budgets that fail on one or more of these measures tend to end up in the “worst” column – sometimes very quickly.

Why the 2022 Mini-Budget Tops the “Worst” List

The September 2022 “Growth Plan”, widely known as the mini-Budget, is already seen by many analysts as the most damaging UK Budget of the modern era. The combination of features was toxic:

• Large, unfunded tax cuts tilted towards higher earners.

• A break with convention by excluding the OBR from producing an accompanying forecast.

• A context of already high inflation and rising global interest rates.

Markets responded by dumping gilts and sterling. Yields spiked. The Bank of England had to step in and purchase long-dated gilts to prevent a spiral that would have forced some pension funds using liability-driven investment strategies into default.IPE+3Trustnet+3Professional Pensions+3

Within weeks, most of the tax cuts were reversed by Jeremy Hunt, and Liz Truss’s premiership collapsed. The episode did not just hurt one government; it reset how investors view UK fiscal policy. The Bank of England has since introduced a new facility to support non-bank institutions in future episodes of gilt market stress, a direct legacy of the turmoil.Reuters

On almost any metric – credibility, stability, political impact – this Budget sits at or near the bottom of post-war rankings.

The Case for 1997 as One of the Best

If the mini-Budget is a lesson in how to lose credibility, Brown’s early period as Chancellor is often cited as a lesson in how to gain it.

The key move was not just a single Budget speech, but the decision, announced in May 1997 and embedded in subsequent Budgets, to grant the Bank of England operational independence over interest rates. That change:

• Took day-to-day rate-setting out of direct political hands.

• Anchored inflation expectations around a clear target.

• Signalled that the government would not try to “pump” the economy before elections through loose money.

Coupled with fiscal rules and relatively cautious early spending, this helped deliver a decade of low and stable inflation with moderate growth. While later criticism focused on complex tax credits, off-balance-sheet liabilities and the build-up of risk in the financial sector, the institutional shift is still widely regarded as one of the most successful UK economic reforms of the late 20th century.Bank of England+3The Guardian+3Research Briefings+3

Other Contenders: Barber, Butler, Lawson and Clarke

Several other Budgets frequently appear in discussions of the “best” and “worst”.

• Anthony Barber, 1972
  The 1972 Budget aimed for a dramatic growth surge. It delivered a short-lived boom but also fuelled inflation and instability, contributing to the turbulence of the mid-1970s. In retrospect, many economists see it as a classic example of fiscal over-reach that undermined long-term stability.The Independent+1

• Rab Butler, 1953 and 1955
  Butler’s Budgets were hailed at the time for boosting prosperity and helping the Conservatives win the 1955 election, but later became symbols of the stop-go cycle: expansion followed by forced austerity when inflation and external deficits worsened.

• Nigel Lawson, 1988
  Lawson’s 1988 Budget is often praised for simplifying and cutting income tax, setting a basic rate of 25% and a 40% top rate. It became a reference point for later tax reform debates. But it also helped inflate the late-1980s boom and housing bubble, making the subsequent recession more painful.

• Kenneth Clarke, mid-1990s
  Clarke’s Budgets are usually rated highly by economists even if they lacked political glamour. They stabilised public finances after the ERM crisis, reduced borrowing and left the incoming Labour government comfortable enough to pledge adherence to his spending plans for several years.

Each of these Budgets shows that the same act can be judged differently depending on the lens. Barber and Lawson won short-term applause but hurt long-term stability. Clarke never delivered a “giveaway” but laid the groundwork for a calmer decade.

Lessons for Today’s Chancellors

Recent Budgets underline how much the rules of the game have changed. Modern Chancellors must:

• Satisfy formal fiscal rules, often framed around debt falling as a share of GDP in a five-year window.

• Work alongside an independent central bank responsible for inflation.

• Submit plans to scrutiny from the OBR.

• Persuade a global investor base still wary after the 2022 shock.

Jeremy Hunt’s Budgets after the mini-Budget focused on stabilising the gilt market and signalling a return to orthodoxy, even while cutting some taxes such as National Insurance. Think tanks and parliamentary briefings have described the fiscal position as fragile, with limited room for big giveaways.Office for Budget Responsibility+3Institute for Fiscal Studies+3ICAEW+3

Rachel Reeves now faces the reverse problem: raising tens of billions in extra revenue while trying to prove that Labour can be trusted with the public finances. Recent coverage highlights investor concern about whether significant tax rises can be postponed without again testing market patience.Reuters+2The Times+2

The implicit lesson from the best and worst Budgets is clear: surprises that undermine credibility are more dangerous than unpopular but clearly explained tough choices.

Why This Matters

At a headline level, Budget debates can sound remote. They revolve around fiscal headroom, debt-to-GDP ratios and long-term forecasts. But the difference between a good and bad Budget is felt directly in everyday life.

In the short term:

• Gilt market reactions affect government borrowing costs and, by extension, mortgage rates and business lending.

• Tax threshold freezes, or “stealth taxes,” change how much of each pay rise is lost to the Exchequer.

• Decisions on benefits and public spending determine how squeezed local services feel.

In the long term:

• Choices on investment in infrastructure, education and health influence growth potential and productivity.

• Repeated short-term giveaways can leave the state more vulnerable to shocks, forcing deeper cuts later.

• Weak credibility raises the risk that a future downturn or geopolitical shock triggers a sharper market reaction.

Globally, the UK’s experience has become a case study. Central banks and finance ministries elsewhere watched the 2022 episode closely, and the Bank of England’s new gilt-market backstop is being monitored as a model for handling future crises in non-bank finance.Reuters+1

For readers, the key point is that Budgets are not just about who “wins” or “loses” in a given year. They set the tone for how the country manages risk, rewards work and funds public goods over decades.

Real-World Impact

Consider a few illustrative examples of how “best” and “worst” Budgets play out on the ground.

A typical homeowner with a variable-rate mortgage
When gilt yields spiked in autumn 2022, lenders repriced mortgage products at speed. Deals were withdrawn, and new offers arrived with higher rates. For a household rolling off a fixed rate, the cost of the mini-Budget translated into hundreds of pounds more each month on repayments. The lesson was blunt: fiscal surprises can hit housing budgets almost overnight.

A defined-benefit pension scheme
Many defined-benefit schemes use liability-driven investment strategies that rely on gilts. During the mini-Budget turmoil, some had to scramble to post collateral as yields shot up, selling other assets in a hurry. The Bank of England’s emergency gilt-buying programme helped to stabilise the situation, but trustees began rethinking leverage and liquidity. A “bad” Budget, in this context, threatened not abstract numbers but the ability to honour pension promises on time.

A small manufacturer outside London
For a mid-sized factory paying business rates, energy costs and wages, Budgets shape tax bills, investment incentives and demand. A credible, stable Budget can support confidence to invest in new equipment or staff. A chaotic one, or a pattern of frequent policy reversals, makes planning harder and encourages caution, delaying upgrades and slowing local job creation.

A local NHS trust or council
Public bodies rely on multi-year assumptions about funding and inflation. A Budget that suddenly cuts planned spending or shifts priorities can force rapid service changes: delayed maintenance, hiring freezes or reductions in non-urgent programmes. By contrast, a stable medium-term settlement, even if tight, allows gradual reform and efficiency efforts rather than constant firefighting.

In each case, the abstract ranking of Budgets as “good” or “bad” shows up as real stress or relief in day-to-day decisions.

Conclusion

Arguments over the best and worst UK Budgets are, at heart, arguments about what kind of risk the country is willing to run. A bold giveaway can buy short-term popularity but risks inflation, higher borrowing costs and painful reversals. A cautious, credibility-focused Budget may feel dull yet provide the platform for steady growth and reliable public services.

The core fork in the road is simple. One path treats markets, institutions and long-term sustainability as constraints that must be respected. The other gambles that the short-term boost from tax cuts or spending will outweigh any later price. History suggests the former approach, exemplified by Brown’s early moves and Clarke’s mid-1990s stewardship, tends to age better than Barber-style dashes and Kwarteng-style shocks.

What comes next will be shaped by how Reeves and her successors internalise those lessons. Signs to watch include the treatment of OBR forecasts, the balance between tax rises and spending restraint, and how quickly any new headroom is used. The line between a “best” and “worst” Budget can be thin – and Britain has already learned how costly it is to discover, too late, which side of that line a Chancellor has chosen