Funding the Future

Could the October 2026 Budget become one of the biggest failures in British Budget history?

Chancellor John Healey will deliver his first Budget for Andy Burnham’s Labour government on 28 October, but I fear he may be preparing for an economic future that simply does not exist.

In this video, I explain why the world economy faces extraordinary risks in 2027 and why the Chancellor must fundamentally rethink his approach to economic management if we're going to survive them. 

War with Iran could continue to disrupt global energy supplies and international shipping.

An AI investment crash could threaten hedge funds, private equity, private credit markets and mainstream banks.

Meanwhile, climate disruption could cause food shortages and rising prices.

These crises could happen simultaneously, creating economic instability far greater than anything conventional Treasury forecasts might anticipate.

We have seen governments make this mistake before. Alistair Darling’s March 2008 Budget failed to anticipate the scale of the financial crisis, while Rishi Sunak’s March 2020 Budget was overtaken almost immediately by the COVID pandemic.

I believe that John Healey risks repeating those mistakes unless he recognises the dangers ahead and prepares Britain for a period of profound economic uncertainty.

Rather than relying on arbitrary fiscal rules and optimistic forecasts, I propose six priorities for the October Budget.

First, government must take responsibility for meeting people’s essential needs, including healthcare, social care, housing and social security.

Second, democratic government must reclaim control of economic policy from financial markets, replacing fiscal rules with meaningful objectives such as full employment, price stability and environmental sustainability.

Third, economic planning must recognise the real resources available, including workers, skills, materials and productive capacity, while ensuring inflation remains under control.

Fourth, productive investment must take priority over financial extraction. Britain needs sustained investment in infrastructure, renewable energy, housing and public services.

Fifth, reducing inequality must become an explicit objective of government policy, supported by fairer taxation and stronger action against tax avoidance.

Finally, economic success must be measured by improvements in people’s lives rather than arbitrary financial targets.

I argue that Britain needs a Budget built around economic resilience, public investment, equality and a politics of care.

The Chancellor cannot assume that the world will return to normal. He must prepare for likely instability while ensuring that people’s essential needs are met.

John Healey has an opportunity to demonstrate genuine economic leadership. But if he ignores the risks facing Britain, his Budget could become irrelevant almost immediately.

The future of Andy Burnham’s government may depend on the choices he makes.

Is France showing us that neoliberalism is beginning to fail? As protests against austerity grow, financial markets are demanding spending cuts while ordinary people are demanding better public services and greater economic security. I argue that this conflict could determine the future of European politics and economics.

In this video, I examine how neoliberalism became the dominant economic ideology of the past 45 years, why its influence is now being challenged, and what might replace it.

The story begins in 1947 with Friedrich Hayek, Milton Friedman and the Mont Pèlerin Society. Their ideas were subsequently promoted through think tanks, wealthy supporters and financial institutions before becoming central to the economic policies of Margaret Thatcher, Ronald Reagan and the Washington Consensus.

Neoliberalism promised that markets would allocate resources more efficiently than governments. But I argue that this ignored inequality, environmental damage and the unequal power of those participating in markets.

Instead of delivering prosperity for everyone, neoliberal policies have encouraged privatisation, deregulation, financial speculation and the concentration of wealth. Productive investment has increasingly been displaced by financial extraction, while wages have stagnated and economic insecurity has grown.

The protests in France, and growing discontent elsewhere in Europe, reveal the consequences of this system. Governments continue to prioritise the demands of financial markets while many citizens experience deteriorating public services and declining economic security.

I also examine Thames Water as an example of the conflict between financial interests and public need. Should the government prioritise the claims of creditors, or the essential services on which millions of people depend?

Looking ahead, I consider whether a future financial crisis, potentially triggered by an AI investment crash, could expose the weaknesses of the neoliberal economic model.

But there is an alternative.

Modern monetary theory helps explain why governments that issue their own currencies are not financially dependent on markets in the way politicians often suggest. Meanwhile, reforms to pensions and ISAs that I have proposed could redirect savings away from speculation and towards productive investment.

I argue that we could create an economy focused on public services, housing, infrastructure, economic security and environmental sustainability rather than financial extraction.

Neoliberalism is facing growing resistance. The question is whether governments have the courage to replace it with something better.

How could Britain find more than £100 billion a year to rebuild its economy? The surprising answer is that the money already exists. We just need to change how our savings are used.

The UK has more than £12 trillion of financial wealth, yet we have one of the worst investment records in the developed world. Our financial system rewards speculation, asset ownership and financial extraction instead of investment in the things we actually need.

In this video, I explain how reforms to pensions and ISAs, based on my Taxing Wealth Report 2024, could transform that situation.

The government provides more than £90 billion a year in tax advantages for savings, but does almost nothing to ensure those savings benefit the wider economy.

I propose changing that.

Green ISAs, which would replace all existing arrangements, could help fund housing, renewable energy, transport and essential infrastructure.

Pension funds could be required to direct 25% of new contributions towards productive investment.

Together, these reforms could release well over £100 billion annually for investment, potentially approaching £150 billion, depending on the rules adopted.

This is not about taking people’s savings away. It is about ensuring that tax-supported savings help create the prosperity on which our futures depend.

Britain does not lack money. It lacks the political will to use its financial resources effectively.

Please watch my previous video on why Britain is poorer than it should be, and then watch this video for the answer. We could be richer. We just have to change our savings system. 

Britain is one of the wealthiest countries in the world, with more than £12 trillion in financial wealth. So why are wages stagnating, public services struggling, housing becoming increasingly unaffordable, and millions of people feeling poorer?

In this video, I argue that Britain’s economic problems are not simply the result of recent crises. They are the consequence of decades of political and economic decisions that have prioritised financial extraction over productive investment.

Britain has consistently invested less than other major developed economies. In 2024, total investment amounted to just 17.9% of GDP, the lowest proportion in the G7. That means we have failed to invest adequately in the infrastructure, technology, skills, housing and public services needed to create lasting prosperity.

I examine the evidence showing how both business and government investment have fallen short, leaving Britain less productive and less economically resilient than it should be.

At the same time, our economy has increasingly rewarded financial extraction. Interest, rents, fees, dividends and speculation have generated financial returns without necessarily creating the productive assets or public benefits that society needs.

Privatisation has compounded these problems. Essential services such as water, energy and transport have been operated to generate private financial returns, often at the expense of investment, affordability and service quality.

Meanwhile, rising property prices and financial asset values have benefited those who already own wealth, while people dependent on wages have experienced much weaker improvements in their living standards.

I argue that these outcomes were not inevitable. They resulted from political choices that successive governments could have made differently.

Britain has the people, skills, knowledge and resources to achieve much more. But prosperity requires productive investment, fairer distribution of economic rewards and a government willing to challenge the interests benefiting from the current system.

This is the first of two videos examining Britain’s economic problems. Today, I explain why we are poorer than we should be. In tomorrow’s video, I will explain what we can do about it.

Austerity was never necessary. It was a political choice, and Britain is still paying the price.

In 2010, George Osborne told Britain that the government had run out of money. Public spending had to be cut, he claimed, because there was no alternative. But was any of that true?

In this episode of Understanding Economics, I explain why the economic arguments used to justify austerity were fundamentally flawed.

The UK government is not a household. It creates money when it spends and uses taxation to withdraw money from the economy. That means the real limits on government spending are the resources available to deliver what society needs, not an arbitrary shortage of pounds.

I explain why cutting government spending during an economic downturn makes matters worse. Lower spending means fewer jobs, reduced incomes, weaker businesses and falling tax revenues. Rather than solving the government’s financial problems, austerity can make them worse.

I also examine the consequences of austerity for the NHS, local government, public services, investment and economic growth.

Above all, I explain why austerity was a political choice, not an economic necessity.

The lesson is straightforward: governments should stop asking whether they can afford to act and start asking whether the resources exist to do what needs to be done.

The message is simple: If we can do it, we can afford it.

Are we living through a new Gilded Age, where a small number of enormous corporations have accumulated too much economic and political power? In this video, I argue that monopoly and oligopoly are becoming serious threats not only to competitive markets, but also to democracy.

Monopoly power is about much more than prices. Dominant corporations can control market access, acquire potential competitors, exploit intellectual property rights, and use financial resources to protect their position. The result can be fewer choices for consumers and greater barriers for smaller businesses.

Economic power can also become political power. Large corporations have extensive lobbying operations and access to politicians and officials that ordinary citizens and smaller businesses cannot match. I examine examples ranging from technology and AI to pharmaceuticals and companies involved in Britain’s public infrastructure.

We have faced this problem before. At the beginning of the 20th century, President Teddy Roosevelt of the USA challenged the power of America’s so-called robber barons. His argument was straightforward: corporations exist because governments provide the laws and institutions that make them possible, and democratic governments therefore have both the right and responsibility to regulate them.

I consider what Britain can learn from Roosevelt today. Decades of mergers, acquisitions, privatisation, and shifting attitudes towards competition have increased corporate concentration, while natural monopolies such as water and energy raise fundamental questions about whether essential services should be run primarily for private profit.

I argue that we need stronger merger scrutiny, a willingness to break up excessively dominant corporations, greater transparency around lobbying, and public control of natural monopolies where regulation cannot protect the public interest.

Economic power should not override democratic authority. Markets should serve society, and government must have the courage to ensure that they do.

What is neoliberalism, and why has it had such a devastating impact on Britain’s economy, public services and democracy?

Neoliberalism has dominated economic and political thinking for more than 45 years. But what does it actually mean, who benefits from it, and why have successive governments accepted its ideas?

In this episode of Understanding Economics, I explain how neoliberalism emerged, why economists such as Friedrich Hayek and Milton Friedman promoted it, and how it became the dominant economic ideology of our time.

I explore how neoliberalism has encouraged privatisation, deregulation, austerity and lower taxes on wealth, while transferring economic power away from democratically elected governments towards corporations, financial markets and the wealthy.

I also explain why neoliberalism’s claims about government money are fundamentally misleading. Governments that issue their own currencies are not financially constrained in the way households are. Understanding that changes how we think about taxation, public spending and the possibilities for economic reform.

The consequences of neoliberalism are everywhere, from NHS waiting lists and privatised water companies to growing inequality and weakened democratic accountability.

But there is an alternative.

I argue that we need a caring state that puts people, public services, democracy and the environment before financial wealth.

The economy should serve people, not the other way around.

This is part of my Understanding Economics series, which explains how the economy really works and how we could make it work better.

What would happen to foreign exchange, imports and exports if the UK had a government that understood modern monetary theory?

Would money leave Britain because we import too much?

And would sterling collapse?

In this video, I explain why these fears misunderstand how international trade and currencies actually work.

Imports and exports involve real goods, services and resources, but they also create financial transactions. When a British importer exchanges pounds for another currency, the sterling does not simply disappear from the UK monetary system. Its ownership changes.

Exchange rates can change when demand for currencies changes, but international trade is only part of the story. Enormous financial flows also arise from investment, property, shares, bonds, banking and speculation. These movements can have a greater influence on sterling than Britain’s trade balance.

I also explain Britain’s balance of payments, the relationship between the current and financial accounts, and why a trade deficit should never be confused with a government budget deficit. The UK government’s ability to create sterling is not determined by Britain’s imports or exports.

Interest rates also matter. I argue that Britain’s longstanding policy of attracting international capital through relatively high interest rates has benefited the City of London while imposing high costs elsewhere in the economy.

So what changes under MMT? The mechanics of foreign exchange do not need to change. Sterling can continue to float against other currencies. What changes is our understanding of the monetary system and our ability to focus policy on real resources, productive capacity, investment and economic resilience.

Rather than fearing trade deficits or believing that Britain can somehow run out of pounds, an MMT-informed government could concentrate on reducing unnecessary import dependence, increasing domestic investment and managing destabilising international financial flows.

An MMT government would not create a foreign exchange crisis. An MMT understanding would instead help us build a stronger and more resilient economy, which is precisely why we need such a goverment. 

What would actually change if the UK had a government that understood modern monetary theory?

In one sense, very little: MMT describes how our monetary system already works.

But in another sense, I argue that it would change almost everything because government would understand the powers it already has.

In this video, I consider how an MMT-informed government might respond to another major financial crisis. Unlike the response to 2008, the objective would not simply be to restore the existing financial system and protect financial markets.

The fundamental difference would be one of control. I argue that an MMT government would recognise that a currency-issuing state can create the money required to respond to a crisis. Its real constraints would be resources, productive capacity, environmental limits and inflation.

I set out several immediate priorities. The Treasury would establish what emergency powers it could use, suspend its dependence on financial markets through the full funding rule, reconsider the payment of interest on commercial banks’ central bank reserves and impose much tougher conditions on institutions requiring government support.

Banks requiring rescue would not simply receive another bailout. I argue that government support should come in return for ownership, with shareholders bearing the risks associated with their investments rather than expecting the public to protect their wealth.

The same principle should extend to shadow banking, including private equity and hedge funds. Financial institutions should not be able to escape effective regulation while expecting government intervention when their activities create systemic risks.

MMT would not eliminate the practical difficulties of a financial crisis. But it would fundamentally change who controls the response. Instead of asking what financial markets will permit, government could ask what action is necessary in the public interest.

The financial plumbing would remain largely the same. What would change is our understanding of it — and therefore who has the power when the next crisis arrives.

Could the October 2026 Budget be based on economic assumptions that bear little relationship to the risks we actually face? In this video, I question the forecasts underpinning the Institute for Fiscal Studies’ Green Budget and ask whether policymakers are preparing for the wrong economic future.

Recent economic forecasts from the IFS, Barclays, and the IMF assume many of today’s disruptions will ease soon and that the global economy will move back toward something resembling normality.

But what happens if the AI boom ends in a financial crisis, war continues to disrupt energy supplies, or climate change causes further problems for food and global supply chains?

We have seen this problem before. Rishi Sunak’s March 2020 Budget was based on forecasts that were rendered almost immediately irrelevant by COVID. Emergency government intervention then became unavoidable.

I argue that we risk repeating that mistake. Economic forecasts based on a return to equilibrium can underestimate the possibility that disruption itself has become the new normal, which it has been in 2026.

That matters because the government’s Budget will be shaped by forecasts from the Office for Budget Responsibility and constrained by its fiscal rules. If those forecasts underestimate the possibility of serious economic shocks, the resulting policies could be inappropriate almost as soon as they are announced.

A crisis would require resilience, investment and government intervention rather than an overriding commitment to arbitrary fiscal rules.

The important question now is not whether a forecast balances neatly on a spreadsheet, but whether government has prepared for the risks we can already see coming. 

I argue that MMT offers a better framework for this uncertainty because it focuses attention on real resources and economic capacity rather than artificial financial constraints. We cannot know exactly what will happen, but we can prepare for it, and we should, and not have a budget built on the basis of economic fantasy.