You're the Chancellor. The Budget is in four hours.
Six decisions. £127bn borrowing. A Commons chamber that will judge everything you do. Choose carefully — your choices interact.
£127bn
Annual borrowing
The government is borrowing £127bn this year — up from £122bn last year (OBR, Oct 2024). Your decisions must put this on a credible downward path. If they don't, the OBR will say so publicly.
4.2%
Gilt yield
The interest rate the government pays to borrow money. When markets lose confidence in the Chancellor's plans, gilt yields rise — making borrowing more expensive. Above 4.5% is a danger zone.
1.1%
GDP growth
The OBR forecasts just 1.1% growth this year — well below what's needed to grow out of the deficit. Some decisions can lift this; others, particularly tax rises, risk dragging it lower.
Your brief
You've inherited the tightest fiscal position in a generation. The OBR forecasts growth of just 1.1% this year. The government is borrowing £127bn — up on last year. Markets are already watching gilt yields nervously. The press has written the headlines — you just haven't decided which ones to hand them.
You must deliver a Budget that is credible to markets, survivable in the Commons, and defensible to voters who are tired of austerity but frightened of debt.
The OBR will score every measure. They cannot be overruled.
Markets reacted badly to the last Chancellor's numbers. Gilt yields are already elevated.
Your political capital is finite — you begin with 60 points. Spend carefully.
Some decisions will cascade and make later choices harder.
LIVE
Budget Simulator
Decision 1 of 6
Progress
1
Spending
2
NHS
3
Tax
4
Welfare
5
Defence
6
Fiscal Rule
Running total
Deficit change—
Decisions made0 of 6
Economy
Deficit£127bn
Gilt yield4.20%
Growth+1.1%
Inflation2.5%
Unemployment4.3%
Political
Capital60 pts
Approval41%
Treasury Advisor
Sir Jonathan Blake
Permanent Secretary, HM Treasury
"Chancellor, the markets will be watching every line. Our credibility is the foundation of everything else."
Decision 1 of 6 — Spending
Set the Spending Envelope
The OBR has confirmed a £127bn deficit. You must close it. The question is how much comes from spending cuts versus tax rises — and how quickly. Your choice here sets the ceiling for every decision that follows.
Your decision, Chancellor
Be specific. The OBR will scrutinise every line — and so will the Shadow Chancellor.
Advisor briefings
A
Tough envelope — real-terms cuts
Deficit: −£12bn · Gilt: −0.15% · Growth: −0.3%
▶
Day-to-day spending frozen in real terms. Capital investment protected. Departments face an average 3% efficiency saving. Closes £12bn of the gap through spending alone.
+Credibility−Public services−Political capital
B
Balanced envelope — modest growth
Deficit: −£5bn · Gilt: unchanged · Growth: +0.1%
▶
Spending rises with inflation. Some departments take small cuts; others get modest uplifts. Relies on tax rises to close most of the gap. The OBR will demand a credible tax plan.
~Credibility~ServicesNeeds tax rises
C
Growth envelope — invest now, save later
Deficit: +£2bn · Gilt: +0.25% · Growth: +0.4%
▶
Front-load investment; argue it grows the economy and pays for itself by Year 5. The OBR is sceptical. If gilt yields spike, this becomes a crisis within days.
−Market risk+Growth potentialOBR uncertain
OBR projected impact
Decision 2 of 6 — Health
NHS: Waiting Lists or the Books?
The NHS waiting list stands at 7.6 million. DHSC wants £8bn extra this year. The Treasury says that blows the envelope. Your spending choice in Decision 1 makes this harder or easier — but either way, something gives.
Your decision, Chancellor
Be specific. The Health Secretary, the OBR, and 7.6 million patients are watching.
Advisor briefings
A
Fund the list — £8bn uplift
Deficit: +£8bn · Approval: +6% · Capital: +5pts
▶
Meets DHSC demand in full. Waiting list will fall within 2 years. Requires either raising taxes further or breaching the fiscal envelope. Nurses and doctors approve.
+Approval−Fiscal headroom+NHS capacity
B
Partial uplift — £4bn with reform
Deficit: +£4bn · Strike risk · Growth: +0.1%
▶
Half the ask, with strings attached: productivity reforms, more private sector capacity, consultant pay reforms. Doctors will strike. The waiting list falls slower — but the books are safer.
~Approval+CredibilityStrikes likely
C
Hold the line — real-terms flat
No new cost · Approval: −5% · Waiting list: 9m by 2026
▶
NHS stays at current funding in real terms. No uplift. Waiting list will reach 9 million within 18 months. Strong fiscal signal — but this will dominate the Parliament.
−Approval (heavy)+Credibility−Political capital
OBR projected impact
Decision 3 of 6 — Revenue
How Do You Raise Revenue?
You still need to close the remaining fiscal gap. Three credible options exist — each with different growth effects, different political costs, and different market reactions. The OBR models all three.
Your decision, Chancellor
The OBR scores every measure. Vague revenue assumptions will be rejected.
Advisor briefings
A
Income tax — 2p on base rate
Revenue: +£12bn · Gilt: −0.1% · Growth: −0.2%
▶
Raises £12bn. Broad base, visible to every voter. Simple, credible, the OBR scores it on day one. Slight drag on growth. Conservative MPs will call it a class betrayal.
−Growth (small)+Revenue reliable−Political capital
B
Corporation tax — 3p rise to 28%
Revenue: +£9bn · FDI risk · Approval: +3%
▶
Raises £9bn. Business lobby will go to war. Some firms will credibly signal relocation. FDI risk is real. But voters support taxing big business.
Raises £7bn — OBR uncertain, behavioural effects large. Very popular with voters. Markets will read this as structural. Gilt yield reaction uncertain.
Revenue uncertain+PopularMarket risk
OBR projected impact
Decision 4 of 6 — Welfare
The Welfare Bill: Biggest Target, Biggest Pain
The welfare budget is £280bn — the largest single spending line. Even a 2% cut saves £5.6bn. But welfare cuts concentrate pain on the poorest voters. The political cost is real.
Your decision, Chancellor
The Trussell Trust has your press release ready. So does the IFS.
Advisor briefings
A
Reform and cut — £6bn saving
Saving: −£6bn · Approval: −8% · Capital: −9pts
▶
PIP assessment reform, UC managed migration, and housing benefit freeze. Saves £6bn. The Trussell Trust will run a campaign the day after. Polling damage will be severe.
+Fiscal (strong)−Approval (heavy)−Political capital
Tighten back-to-work programmes, not benefit levels. Moderate saving. OBR will score it cautiously — behavioural assumptions are soft. Politically sustainable, but markets wanted more.
~Fiscal~Approval+Credible narrative
C
Protect welfare — no cuts
No saving · Gilt: +0.1% · Approval: +4%
▶
Uprate all benefits with inflation. Costs £0 against the baseline, but misses £6bn the markets were expecting. If you've already overspent on NHS, this is the moment gilt yields react.
−Credibility+ApprovalMarket risk
OBR projected impact
Decision 5 of 6 — Defence
Defence: NATO Target or Budget Reality?
NATO has asked all members to reach 2.5% of GDP on defence. The UK is at 2.3%. Meeting the target costs £4bn. Refusing it will draw criticism from Washington and your own backbenchers.
Your decision, Chancellor
Washington and your Defence Secretary are both watching. So is the gilt market.
Advisor briefings
A
Meet the NATO target — 2.5% GDP
Cost: +£4bn · NATO: approved · Commons: strong support
▶
Full £4bn increase. Defence Secretary delighted. Washington approves. But this blows remaining fiscal headroom — something else must give.
−Fiscal headroom+NATO credibility+Commons support
B
Path to 2.5% — commit, don't fund now
Cost: +£1bn · NATO: lukewarm · Political: stable
▶
A formal commitment to reach 2.5% within 4 years, funded from growth. Costs £1bn now. Washington is lukewarm but accepts it. The Defence Secretary will grumble but won't resign.
~Fiscal~NATO+Politically stable
C
Hold at 2.3% — no increase
No new cost · NATO: critical · Capital: −5pts
▶
No movement. US officials will brief against you. The Conservative opposition will make this their line in the Budget debate. Fiscal position unchanged.
+Fiscal−NATO standing−Political capital
OBR projected impact
Decision 6 of 6 — Fiscal Framework
Set Your Fiscal Rule
Every Chancellor sets a fiscal rule — the target the OBR will judge you against. Choose the right rule and you give yourself room to manoeuvre. Choose too loosely and markets will punish you on the day. This is your final call before the despatch box.
Your decision, Chancellor
This is the rule you'll be judged against for the rest of the Parliament. Choose carefully.
Advisor briefings
A
Balance current budget in Year 3
Headroom: £4bn · Gilt: −0.20% · Flexibility: low
▶
No borrowing for day-to-day spending by Year 3. Demanding — OBR confirms headroom of only £4bn. A single economic shock breaks it. Markets will love it.
Debt as a share of the economy must be falling by end of Parliament. OBR confirms £9bn headroom. Credible but not tight enough for some in the City.
~Credibility+FlexibilityMarket: neutral
C
Golden rule — borrow only for investment
Headroom: £14bn · Gilt: +0.15% · Market: cautious
▶
Allows borrowing for capital but not current spending. OBR gives widest headroom — £14bn. But the previous Chancellor tried this and gilt yields spiked. The market will remember.