- 15 minutes ago
Gary Meyers, James Bennett, and Paul McGonagle discuss the UK budget, policy priorities, and the outlook for Britain.
London Reporting — The Meyers Report. Recorded October 31, 2026.
London Reporting — The Meyers Report. Recorded October 31, 2026.
Category
🗞
NewsTranscript
00:07Good morning or good afternoon, depending upon where you are in the world. Welcome to the Myers
00:13Report, London Reporting Edition. It is Saturday, October 31st, 2026. It's Halloween. Today from
00:24London, we have James Bennett, our student at the London School of Economics, and an aspiring
00:31national leader, and we're pulling for him. From Boston, we have Paul McGonigal, who represented
00:37the United States at international forums as a diplomat with the Nixon, Ford, Carter, and Reagan
00:44administrations, and then as an international banker with some of the world's most powerful
00:49institutions. Our subject today is the UK, its budget processes, its objectives, and the major
00:58changes intended for Britain and how this will impact the Brits as well as the United States.
01:05So, let's start with the budget. The new Chancellor of the Exchequer has just presented his budget.
01:12First off, James, what is a Chancellor of the Exchequer for those who don't know?
01:19So, the Chancellor of the Exchequer is one of the four great offices of state in His Majesty's
01:27government. So, the four great offices are the Prime Minister, obviously the Member of Parliament
01:33who the King appoints to lead the government. Then you have the Home Secretary, who's responsible
01:38for all things domestic, such as immigration, policing, national security, etc. Then, of course,
01:43you have the Foreign Secretary, who's responsible for all things international. So, our foreign policy,
01:48all of our international relationships and partnerships. And then you have the Chancellor
01:52of the Exchequer, who's responsible for all things relating to the Treasury and public finance.
01:59So, he is only the second Lord of the Treasury. So, technically, the Prime Minister still has
02:04executive authority over everything to do with public finance. However, in practice, all that
02:11responsibility tends to be delegated to the Chancellor of the Exchequer. And different
02:15Chancellors over the course of our recent history have had different levels of power. For example,
02:21Gordon Brown, who was the Chancellor under Tony Blair, he was considered to be the most powerful
02:26Chancellor in recent history. So, when Andy Burnham was appointed as the new Prime Minister in July of this year,
02:36he sacked the previous Chancellor, Rachel Reeves, who'd been Chancellor under Keir Starmer for two years,
02:42and he appointed John Healy to be the new Chancellor of the Exchequer. Healy had previously served in
02:48Keir Starmer's government as the Defence Secretary, and he'd resigned from that position because he
02:52believed that the government was not doing enough to spend more money on defence. So, he's now been
02:57appointed Chancellor, and he delivered his first budget on Wednesday of this week. So, every year,
03:03around this time of year, the Chancellor delivers the budget, which essentially sets out all the
03:08changes that he's making to public spending and taxation. So, yes, that's essentially the job of
03:14the Chancellor, and this week he's been very much in the public eye. Did the budget reflect any major
03:20international policy changes, such as in the area of immigration? Not particularly. So, the budget has
03:27largely been described as a nothing to see here budget. So, as expected, certain areas of tax were
03:35raised. That was relatively expected for a Labour Chancellor to do, especially in an economic
03:44climate when fiscal discipline is not necessarily something that is associated with the UK Treasury.
03:50When it comes to immigration, there weren't any major changes. The asylum costs were cut by about £1
03:58billion, but that's not necessarily due to a resulting policy change, more a reflection of the fact that
04:05over the last year or so, there's been a lot of efficiency improvements within the asylum system.
04:11So, many asylum seekers have been moved out of hotels into HMOs or military barracks as well. So,
04:18the cost per person is much lower when you do that, and as a result, the chances of being able
04:24to
04:25reduce that headline figure by about £1 billion, but that's more of a result of efficiency rather
04:30than policy changes on immigration itself. So, yeah, so not many major changes in that area.
04:37When it comes to international, so another £10 billion has been budgeted for economic and military support
04:47for Ukraine, the first £500 million of which is basically going to be straight away within the
04:53next couple of months. At home, obviously, I mentioned before that John Healy, the Chancellor,
04:59he used to be the Defence Secretary and he resigned because he believed the government wasn't doing
05:03enough to spend more money on defence. So, his first budget has set out how the new defence investment
05:08plan is going to be funded and it's going to see the total amount of defence spending rise to 2
05:14.7% of
05:15GDP by the end of 27-28 and then up to 3% by 2030 and then 3.5%
05:22by 2035. So, those are the broad
05:26sort of headline figures when it comes to our international spending and our defence spending.
05:32It should be noted that, obviously, the previous government, they reduced foreign aid commitments
05:37from 0.5% of GDP down to 0.3%. Andy Burnham has previously stated that he'd like to raise
05:42that
05:43number, that foreign aid figure up to 0.7% of GDP, but that's not yet been costed in this
05:49first budget.
05:49A question. There's been pressure from the US to get Europe, European countries, NATO, to be spending as
05:57much as 5% of their budget, of their GDP on defence. So, the UK is not going to do
06:05that.
06:06No, but it is still a significant increase. If the commitments are met, so the 3.5% by 2035,
06:12obviously, there's nine years to go. If that's met, that will represent a substantial increase from
06:18the sort of 2.2% area that we've historically been hitting in recent years.
06:25One of the biggest issues that has arisen both in the UK and in Europe is climate and energy policies,
06:36where the climate policies, which I believe is a false narrative, but that's another story.
06:42But the point is the climate policies have closed power plants and created energy shortages and
06:48increased prices. Is the UK going to do anything about putting itself in a better position?
06:57So, this budget wasn't really a major departure in current energy policy. It's worth noting that when
07:05Andy Burnham was sort of in the face of being appointed prime minister, when everyone knew that
07:10he was going to be the next prime minister, there was much debate over who his chancellor was going to
07:14be.
07:14And so, the two main contenders were Shabana Mahmood, the Home Secretary, and Ed Miliband, who used to be
07:21the Energy Secretary. And the reason for that is because Ed Miliband is considered to be very,
07:27very much a pro-green energy, a pro-green energy politician. So, many people speculated that if he
07:33become the Chancellor of the Exchequer, you would see a significant liberalization
07:39transition towards a more green energy policy on behalf of the government. However, that didn't
07:45happen and John Healy was appointed instead. And as such, the budget hasn't really moved too much
07:50when it comes to climate and energy independence. However, I would say that from my own perspective,
07:56it does seem that the political direction of travel is away from the sort of net zero ideology of the
08:06late 2010s, because we now see both the reform and the Conservative Party distancing from those
08:11commitments. And these were obviously commitments that were made under a Conservative government.
08:14But in terms of this budget and the headline figures, there's not really any movement now.
08:18Are there any other areas of significance regarding the budget and what's going on?
08:25I mean, relatively expected commitments were made when it comes to public spending.
08:32So, another £37 billion in NHS spending versus the final year of the previous government, for example.
08:39On the cost of living, there were significant commitments announced. So, for example,
08:45for all households within four different tax bands, the four lowest tax bands. So, there's about 20
08:53million households in total. So, pretty much the majority of the country. He announced £100
08:59payments in order to help with energy costs for this winter. In terms of social housing and affordable
09:06housing, another £2 billion were announced towards those areas. I'm just trying to get the headline
09:14figures up now. And then, yes, and then another £5 billion towards a new first-time buyer scheme in
09:21order to help people get on the property ladder. So, there's been significant announcements when it
09:26comes to sort of the cost of living and trying to help people through that. It seems like it's very
09:31much
09:31trying to ease financial pressures in the short term with the hope that it might be able to stimulate
09:36economic growth in the long term.
09:41Shifting gears on you, is there going to be any shift in politics in the UK? Do you believe that
09:48the Reform Party will be gaining strength? And if not them, who will?
09:53So, the Reform Party has declined quite substantially over the past 12 months or so. So, around about 12
09:59months ago, they were falling around 31%, 32%. Today, and they were leading the polls by a good sort of
10:067 to 10 points. Today, they're now in third place. So, they've been overtaken by the Conservatives.
10:13So, Reform polling around 20% to 21%. The Conservatives are polling around 21%, 22%,
10:18so just ahead of Reform. And then Labour are quite significantly in the lead on around about 28%.
10:25What's caused the decline?
10:27Some multiple reasons. So, I'd say there's three main reasons. So, the first reason would be the
10:33emergence of Restore Britain, which is a sort of rival right-wing party to Reform, as we know.
10:40And they're polling around about 5%, 6%. And a lot of that has obviously taken votes,
10:44taken support away from Reform. The second reason would be the fall of Keir Starmer and
10:49him being succeeded by Andy Burnham. He's obviously very popular right now. He's still in his honeymoon phase.
10:55And so, a lot of voters, particularly in the North and the Midlands, who were traditional Labour voters
11:01and switched to Reform during the Keir Starmer Premiership, they're now starting to come back
11:06to Labour because they're supportive of their new leader. And then, I'd say the third reason is
11:13probably Reform have had a lot of scandals and issues and negative headlines. So, of course,
11:18we had the investigation into Nigel Farage's £5 million gift from Christopher Harbon
11:25earlier this year, which caused him to resign his seat as an MP and call a by-election,
11:30which he subsequently won. However, despite the fact that he won that by-election,
11:33that still caused an issue with his national popularity. We've also had the Channel 4 documentary,
11:40which showed senior members of Reform accepting legally questionable donations from journalists
11:48who were posing as American billionaires. And then we also had the ITV documentary from a couple of
11:53weeks ago, which showed lots of Reform councillors making unpleasant remarks.
12:01Hold a second. Hold a second.
12:02So, that's caused Reform to decline.
12:04Okay. Question. They were journalists posing as American billionaires. Were those American
12:09journalists or British journalists?
12:11No, they were British journalists.
12:14I would have thought the accent would have given them away.
12:17Well, people can put on different accents.
12:20So, what comes next for the UK politically and economically?
12:24Well, Andy Burnham has a lot of political capital right now, but he doesn't have a lot of
12:28actual capital. As I say, the public's finances are not in a particularly good state.
12:33Yeah. Borrowing costs are at a very high level now. So, the 30-year guilt is at 6%.
12:39And that's higher than it was even during the List Trust Premiership.
12:43So, as a result, while Andy Burnham is sort of pursuing a quasi-populist economic message
12:49of investment into deindustrialized areas, it doesn't seem that the books are going to allow
12:54for that. The books or the bond markets are going to allow for that.
12:57So, you said the books?
12:59Bond markets.
13:00Bond markets.
13:02The public books and the bond markets are going to be particularly supportive of Andy
13:07Burnham's fiscally expansive agenda, which also he's still constrained by the 2024 manifesto.
13:14Now, he's not legally or constitutionally required to abide by that manifesto, but obviously,
13:19he's not won a general election, and the Labour Party and all of their MPs were elected on that
13:252024 manifesto, which is obviously a much different agenda than what he wants to pursue.
13:30So, if he wants to get his own mandate and have that democratic mandate to pursue his own agenda,
13:38then he would need to go to the public and call a general election.
13:43Right now, the sort of feeling around Westminster is that it is possible that he will call a general
13:48election, because the polls are suggesting that if he was to call one, he would win.
13:53And obviously, if he wins that general election, not only does he have a democratic mandate,
13:57but he goes from having two and a half years as prime minister to five years as prime minister.
14:03However, it's widely expected that he wouldn't win by as much as Keir Starmer won in 2024,
14:09and so he would end up with a slightly lesser majority, or he might not even win a majority at
14:15all.
14:16So, there's lots of different views on whether there will be a general election.
14:19He's come out and denied it and said that there won't be a general election.
14:23However, of course, you know, prime ministers...
14:25It certainly means that there will be.
14:27Well, yeah. So, Boris Johnson said there wasn't going to be a general election,
14:30and then there was a general election, for example. I think Theresa May did the same thing in 2017.
14:36So, look, if you're the prime minister and you don't come out and flat out,
14:41if you're asked if there's going to be a general election and you don't flat out deny it,
14:44then that means the election's on. So, he kind of, either way, he's kind of forced to at least deny
14:50it in the moment. But within the way that the political climate is set up right now,
14:55it definitely does make it logical to conclude that from his perspective,
14:58the general election might be in his interests. But obviously, it is a significant gamble because
15:02the reality is, as I said, there's nothing constitutional that forces him to abide by
15:07the 2024 manifesto. And there's still another two and a half years in this parliament where
15:11he has a 150-seat majority. So, it's perfectly reasonable to suggest that he would want to gamble
15:17with that and risk losing all of that just to increase from two and a half years to five years.
15:22Is Nigel Farage basically a non-entity going forward, or is he going to come back?
15:29I wouldn't say so. So, Farage, so reform is still polling around 20%, which is a very significant
15:35share of the vote. And they're only just behind the Conservative Party. And look, reform were at 14%
15:43two years ago when we had the last general election. So, they're still significantly higher than they were
15:49then. So, you know, if we do have another two and a half years, three years until the next general
15:55election,
15:55then it's perfectly reasonable to suggest that they might start climbing again. But it's definitely fair
16:00to say that reform have declined quite substantially, at least for the time being.
16:07Why should anyone in the US care about what's going on in Britain?
16:12Yeah. Because, as I've said multiple times, we are very similar countries. We are built from very
16:19similar foundations. And therefore, anything that we are prone to, America is prone to as well.
16:25So, you're saying sort of like the canary in the coal mine.
16:28So, what's the bottom line? I have one macro question and a couple of micro questions. What's
16:36the bottom line? I'm assuming that everything in the budget gets implemented on schedule. Where
16:41do we wind up in terms of the deficit as a share of GMP?
16:45I mean, it's going to continue to hold around 100%.
16:50Well, the deficit, not the debt.
16:52No, sorry, the debt. Sorry. So, the deficit this year, as a share of GDP, I think it was about
16:58four, but let me get an exact number for you. But I'll tell you, it's not a significant
17:05departure from what it was under the Conservatives. Because under the Conservatives, as I don't know if
17:11you remember, the tax burden under a supposedly right-wing government rose to the highest
17:19level since World War II. So, yeah, so 4.2%. So, I was about right. In terms of what's forecast,
17:26now that's forecast to decrease to 2.1% by the end of this parliament, and then 1.8%
17:33by 2032. But of course, you know, just because something's forecast in the budget, you know,
17:38this is a budget that's being presented by the Treasury.
17:41So, obviously, I would say the current level of the deficit is something the Americans can only wish for.
17:46Yeah, well, I don't know what your deficit's at.
17:4950% higher than that.
17:50Really? Yeah, I mean, it wouldn't surprise me. Because obviously, the president, well,
17:54the last four administrations, I would say, pursued, have not been very fiscally responsible. I'd say,
18:00my personal opinion, Bill Clinton's probably the only fiscally responsible president of the last 30 years.
18:06Well, he had a pretty good partner in Newt Gingrich. He had some stuff done at the time.
18:09Hmm. We have that history. You know, we haven't, there were no prominent politicians in the U.S. today,
18:16which have identified the budget as a significant problem. Yeah, well, that's, we have no Paul Reince.
18:22But that is, that is concerning.
18:24It is. There was a piece on the budget in this week's London Economist, and they had two complaints. One
18:34was
18:35that there's nothing in the budget that does anything significant about what they characterize
18:43as Britain's bloated welfare state. And the other complaint was they didn't do anything about the
18:49stamp tax, which the economist has a big problem with. Yeah, but we never expected that. Like,
18:55Labour is not going to be the party that cuts welfare. So no one ever really expected that
19:01there were going to be significant cuts to welfare, because that's just not something within Andy
19:05Burnham's mandate or within the Labour Party's mandate. So I say that Andy Burnham's not constrained
19:10by the 2024 manifesto, which is correct, but he is constrained by the members of parliament.
19:14Because at the end of the day, if the members, it's not, it's not a presidential system, right?
19:19If, if the Labour MPs want to get rid of him, then they can do it tomorrow.
19:23Well, Andy Burnham is still constrained by these Labour MPs who are not going to support
19:27an economic agenda that significantly cuts welfare. So no one ever really expected that that was going
19:32to be part of this budget.
19:35For the bottom line, the bottom line of the budget is it's a nothing to see here budget.
19:40Um, and that's a term that a lot of pundits and commentators were using quite a lot going
19:45into the budget. Um, and essentially means that the government are trying to say there
19:49aren't any real problems. Um, everything's fine. Keep calm and carry on. And the interpretation of
19:56that could be that if they're trying, if they're trying to present the budget in that way, they don't
20:00want to cause any issues. They don't want to, um, cause any shocks because they might be setting
20:04themselves up to go into a general election. Um, now that's not, obviously we don't know
20:09that. Um, it's just one interpretation, but I will say that there was, I can't remember the name
20:13of the journalist. Um, I remember speaking to a journalist last week who was very sort of well
20:18versed in, in budgets and public finance. Um, and he said that, um, every, every part of this budget
20:26was, was screaming, um, snap general election to be called very soon. So it is definitely a possibility,
20:33I will say. Um, but I wouldn't say it's, it's not a probability. I personally would say the chance
20:39of a general election being called in the next six months is probably about 15 to 20%, which is
20:46a lot higher than it was six months ago, but it's still, you know, much more likely that it doesn't
20:51happen than it does. Yeah. And it's worth noting. Um, so constitutionally the way, because the idea of
20:59calling us a snap election isn't really something that, um, would be familiar to, um, the American
21:04mind. So essentially the prime minister is the sole person with the power to dissolve parliament.
21:11So in 2011, the conservatives passed the fixed term parliament act, which meant, which essentially
21:18took that power away from the prime minister. So the prime minister no longer has, um, the authority
21:22to dissolve parliament. Well, technically the king has the authority to dissolve parliament, but the
21:26prime minister is the person who can tell the king to dissolve parliament. So the fixed term
21:30parliament act took that away and said that parliament would always last for five years
21:34unless two thirds of MPs voted to dissolve parliament. And the impractice effect of that
21:41meant that, um, realistically in order to get that two thirds threshold, you needed both of both the
21:46governing party and the main opposition party to agree to dissolve parliament and call a general
21:50election. But in 2023, uh, the conservatives, uh, the same party who'd signed the, who passed that,
21:57um, passed that legislation, uh, they repealed it. They repealed the fixed term parliament act
22:02and returned the power of dissolving parliament to the prime minister. So if you want, Andy Burnham
22:08can wake up tomorrow, um, go to Buckingham palace and tell his majesty to dissolve parliament.
22:13And if that happens, a general election will be held in six weeks. Okay. So the king does have the
22:20power to dissolve parliament. He can, but he'll, he'll never do it. He, he, he will only do it if
22:25and only if the prime minister asks him to, or possibly in case of a national emergency.
22:31But that's that, no, that's not, that's not going to happen. Why? Because that's, I don't,
22:37I don't know the last time the king dissolved parliament against the wishes of the prime minister,
22:42or if it's ever happened, it would surprise me if it's happened. And it's definitely not happened
22:46in the last 150 years. Okay. Paul, um, how big an issue is the stamp tax?
22:54The stamp tax, um, I mean, in terms of its overall effect on, on the public finances, it's not exactly,
23:01um, a heavyweight line. However, it is, um, but like politically it's, it's, it's something that's
23:07weaponized quite a lot by the conservative party. So one of Kevin Bednock's first, um,
23:12headline policies, when she became headline economic policies, when she became leader of
23:17the conservative party was the abolition of, uh, of, of stamp tax. Um, but it's something that's
23:23just not, it's not, it's not going to happen within this, this parliament and no one, no one expects it
23:27to. So like you mentioned, you mentioned before the, um, the two men. One second, one, one real fast
23:33question here. The stamp tax, is that similar to the stamp tax that helped create the American
23:39revolution or is it different? And if so, how? I, I wasn't there. So I, I, I don't know.
23:46Neither were we. Um, and my understanding is the tax on the, uh, on the, on, on transactions
23:54and the transfer of property. Yeah. Interestingly enough, we have taxes on transfer of property
24:00right here. Yeah, we do. Yeah. Go ahead. I'm sorry. No, no, no. It's, um, no, no. So what,
24:09what Paul was saying before about the two men takeaways from the budget being about no movement
24:13on the welfare state and normally even on stamp tax? And yeah, I mean, those are both true,
24:18but they weren't, they were never expected because for the reasons I explained before,
24:22um, it was, it was just simply never, never viable. I mean, I'll share, I'll share the stamp
24:27tax figures with you now. So, cause I mentioned, I don't know, I don't know if it's higher or lower
24:31in America. So the tax rate on the first 125,000 pounds of the property value is 0% and
24:40then it's
24:402% on 125 to 250,000 and then 5% between 250,000 and a million, and then 10
24:48% between 1 million,
24:491.5 million, and then 12% for anything above 1.5 million. So on a 2 million, that's higher
24:55than
24:55what we have here. Is it? Okay. Yeah. There you go. On a 2 million pound home, you're probably
25:00looking at about 150,000 pound worth of tax. Probably a bit. And as are at the state and local
25:06level, not at the federal level, right? But they're substantially lower.
25:10Yeah. Oh, but it's less on, on first time buyers, it's much less. So on first time buyers,
25:15it's, it's tax free up to 300,000, then 5% up to 500,000. Um, and then if it's
25:24above 500,000,
25:25then it goes up to back up to the normal rate. So essentially it means that first time buyers
25:30who are buying properties under 500,000 pounds, um, which is about just over the average house price
25:35in, in, in England and Wales, um, they, they will pay substantially less, um, uh, stamp duty.
25:42Uh, so just doing a bit massive, if you're a first time buyer and you buy a 500,000 pound
25:46house,
25:46which is a pretty decent price in, in England, unless it's in, unless it's in London. Um,
25:51then you would pay, um, 10,000 pounds of stamp duty on that. So not that much.
25:57Right. It tends to be at the local level here. Um, and for various reasons on Martha's Vineyard,
26:02where I have a, another house is a tent. There's a, there's a, a tax on the transfer of,
26:08of, uh, property, the proceeds of which go into the land bank, which then acquires, um, land on the
26:16island and takes it out of development. So you can't develop it. Oh, and Gary, to answer your
26:22earlier question. Uh, so the last time, uh, the monarch dissolved parliament independently
26:28of the prime minister, um, was William the fourth in 1834, sorry, 1835. Uh, so he dismissed
26:36Lord Melbourne's government in 1834, um, and then appointed, um, Sir Robert Peel, um, and dissolved
26:43parliament, um, immediately after that. Um, but it's important to know that while he dissolved
26:48parliament independently of his own prerogative, um, it wasn't necessarily against the wishes of
26:53the prime minister as the prime minister did want an electoral mandate. Um, so in terms of
26:59in, in 2026, the King turning around and dissolving, um, parliament against the wishes of the prime
27:05minister, it's a complete impossibility. Okay. Most people think the King likes the prime minister as
27:10well. I won't ask you any more on that subject. Paul, you've got any other questions or closing
27:16comments? No, I don't. Are you optimistic or pessimistic about the future of Great Britain,
27:22of England? Um, I don't know, to be honest. It changes every day. It changes every day.
27:30Okay. With that, I want to say thank you. Be well, have a good week, and God bless the UK
27:37and England, and God bless America.
Comments