Maurisa Coleman: The economic double bind – trust, Truss and the trap Reeves walked into

Maurisa Coleman is a British–Trinidadian entrepreneur, who has worked as a Parliamentary researcher. She is also an ambassador for the Notting Hill Carnival.

When Liz Truss delivered her mini-budget in 2022, the reaction was swift and unforgiving. Markets recoiled, gilt yields spiked and the episode quickly became shorthand for economic recklessness. Yet with the benefit of hindsight, it is worth distinguishing between political failure and economic intent. Truss’s instincts were recognisably Conservative: lower taxes, higher growth and a belief that Britain could expand its way out of stagnation. The deeper problem was that her programme landed in an economy where trust had already broken down.

For ordinary people, the lived experience of the mini-budget was not one of tax cuts and rising confidence. Critically, most of the policy measures were reversed before their full effects could play out, meaning the long-term benefits for consumers were largely never realised. Instead, households experienced rising mortgage costs as borrowing rates jumped, a weaker pound that fed into higher prices, and a pervasive sense of economic instability. Whatever the theoretical merits of the strategy, the collapse of confidence meant it never reached the point where it could change behaviour. Without trust, policy transmission fails.

Rachel Reeves chose the opposite extreme. Her 2025 Budget represented a deliberate pivot towards restraint, discipline and institutional reassurance. There were no headline increases in income tax, but thresholds were frozen, reliefs tightened and taxes on savings, dividends and property increased. The overriding objective was to demonstrate fiscal responsibility quickly and visibly. In doing so, Reeves prioritised short-term signals of control over longer-term growth dynamics.

The consequences of that choice have filtered rapidly down to where voters feel them most clearly. While Reeves did not mandate council tax increases directly, her Budget and the wider funding settlement restrict the growth of central government funding and reduce councils’ ability to absorb rising cost pressures. As a result, local authorities are increasingly left with few options other than raising council tax to balance their books. In practice, councils across England are imposing council tax rises again this year, often of around five per cent once core increases and adult social care precepts are combined. For households, this remains one of the most visible and unavoidable taxes they face, and it continues to rise faster than many incomes.

This is the double bind of extreme budgets. When governments act without trust, markets react. When governments govern without trust, voters react. Labour has been keen to frame the Truss mini-budget as proof that Conservative economics “crashed the economy”, but that reading misses the deeper constraint both approaches encountered. Truss attempted to act boldly in an environment that could not absorb it. Reeves responded with restraint in an environment where confidence still needed to be rebuilt. In both cases, the same underlying problem prevailed.

That is why the macroeconomic story is inseparable from the devolved one. Decisions taken at the Treasury do not stop at the gilt market; they shape the fiscal space available to councils and local services. By tightening at the centre without offering a long-term growth narrative, Reeves left devolved authorities managing decline rather than renewal. The result has not been reassurance, but resentment.

This is where Labour’s approach is more damaging politically. Instead of a visible market shock, the adjustment has been channelled into everyday life. Frozen thresholds, tighter reliefs and rising council tax bills have shifted the burden onto households least able to absorb it. For many voters, this does not feel like stability; it feels like a slow, managed erosion of living standards.

For Conservatives, the lesson of 2022 is clear. Trust was wrongly assumed, and a pro-growth strategy was launched too fast into an economy already on edge. Labour has learned the wrong lesson. In its urgency to show how different it is, it has fallen into the same double bind from the other side — governing for short-term approval while quietly undermining long-term credibility.

Trust is not rebuilt by proving how tough a Chancellor can be, nor by endlessly invoking past missteps. It is rebuilt when economic management feels coherent, predictable and fair at the household level. Until that happens, Britain will remain trapped in an economic double bind: unable to act decisively without unsettling markets, yet unable to impose restraint without deepening public mistrust — all while the costs continue to arrive quietly, year after year, through council tax bills and household budgets.