DAN HODGES: Kemi is in danger of falling into a carefully prepared Labour trap over the Budget - which ends in a snap election

As usual, Kemi Badenoch wasn’t pulling any punches. Speaking to a packed audience of economists and journalists on Monday, she eviscerated Labour ’s economic strategy. There was no clear plan for combating soaring debt. There was no coherent programme for reducing wasteful public spending. There was no desire or urgency to constrain the spiralling welfare bill. ‘I’m worried that next week John Healey will deliver a Budget that does more damage to our country than either of Rachel Reeves ’s did,’ she declared. The Leader of the Opposition is right to be worried. Britain’s leaders are in economic denial. Ever since Keir Starmer tried, and brutally failed, to use his super-majority marginally to trim the amount the country spends on benefits, the course of this Parliament has been set. Labour MPs will not countenance any attempt to switch off the public spending tap. And any Prime Minister who so much as glances at it will suffer Sir Keir’s grisly fate. But while Badenoch may be correct in her analysis of the grim fiscal realities facing Chancellor John Healey when he delivers his maiden Budget next week, the politics are a different matter. Indeed, the Tories , and Labour’s other opponents, may be in danger of falling into a well-prepared trap. There has been a funereal drumbeat in the build-up to next Wednesday’s announcement. And its timing and timbre have been carefully orchestrated within Downing Street . Andy Burnham's focus is increasingly on the snap election he plans to call early next year, writes Dan Hodges ‘It is going to be challenging, because the picture around the world is challenging, particularly the situation in the Middle East,’ PM Andy Burnham warned last month. ‘We won’t take risks with people’s living standards or with the economy as a whole, so we will take it all into account.’ His words were immediately seized upon as marking a significant departure from his usual sunny narrative of optimism and hope. This was, his critics proclaimed, evidence that Burnham had finally run out of road. After attempting to hide the nightmarish fiscal picture behind a blizzard of TikTok videos, he had no option but to hike taxes, slash spending, or – in extremis – both. It was a reckoning his political opponents awaited with thinly-disguised relish. ‘I’ll be honest, Burnham’s bounce in the polls has lasted longer than I expected,’ one Shadow minister told me. ‘But the Budget is where he’s going to come a cropper. The numbers are dire. The markets are getting fractious. He can’t duck the tough decisions any more.’ Possibly. But there is increasing evidence that Burham thinks he can. The dire prognostications circulating outside government are not aligned with some of the briefings I’m getting from within it. Far from the ‘bloodbath’ predicted by some Tory and Reform sources, a senior minister told me: ‘I expect the Budget to be broadly neutral.’ They revealed: ‘There will be some tinkering at the margins. Some taxes will be raised to keep the markets happy. But that will primarily come from business and the banks. ‘I expect we’ll be able to claim the voters have been protected. So if the Tories want to scare people into thinking they’re going to get massively clobbered, that’s fine by us.’ This slightly less dire outlook is in part a product of the overall standing of the economy. Last week’s IMF forecast, while downbeat by historic standards, contained some slivers of good news. Despite the global headwinds, the UK’s projected growth was upgraded from 1 per cent to 1.3 per cent. The UK is also projected to do better than other major economies in addressing its debt mountain – largely because stealth tax rises will kick in next year. And, while inflation is set to continue to rise for the rest of this year, it is also predicted to fall back in 2027. The combined impact of these silver linings trimming the brooding economic stormclouds is that the Chancellor has more room for manoeuvre than popularly perceived. There is minimal scope for a major boost to neglected areas, such as defence. Or tax cuts to ameliorate the cost of living. But the slap in the face delivered by Rachel Reeves to the working men and women of Britain 12 months ago is unlikely to be repeated. If – as Burnham insisted prior to the Labour conference – no election is planned before 2029, then the alarming prophecies of demons lurking inside the Chancellor’s famous red box would carry validity. This would be the moment in the economic and political cycle for the tough decisions to be made, belts to be tightened and bad news delivered. Then, in two years’ time Healey, would stand up triumphantly, praise the nation for taking its medicine and announce bread and roses for all. The Tories, and Labour’s other opponents, may be in danger of falling into a well-prepared trap But, as is becoming increasingly clear, the Prime Minister was pulling a fast one. The reality is he believes he can indeed duck the tough decisions, at least for a few more months. The polls are continuing to move in Burnham’s direction. With attention shifting towards the economy, the expectation within No10 is that Reform – who have precious little to say on the issue – will continue their slow implosion. Badenoch and the Tories are expected to pick up support, as they re-establish themselves as the party with the only realistic alternative to Labour’s relatively radical, old-time, socialist offer. And that, according to the Prime Minister’s allies, will produce a window of opportunity. ‘The strategy will become very obvious once the Budget has been delivered,’ one minister told me. ‘There won’t be anything there that will scare the horses. The plan is to let the poll lead continue to tick up, reach the point where we’re on course for a majority of 40 or 50, then go to the country. ‘The Tories will attack John [Healey] for not addressing the fundamental problems. He’ll just shrug and say he’s being cautious and prudent. And then we’re off.’ There are a number of risks to this approach. A renewed conflagration in the Middle East could see the Chancellor’s room for manoeuvre rapidly shut down. A further delay in addressing the debt crisis could finally tip the already jittery markets over the edge. Another act of adventurism from Putin could catastrophically expose the Government’s failure to invest in the defence of the realm. But Budgets are as much about public perception and expectation than they are economic reality. It may take many months, if not years, before the full impact of the measures unveiled next week is felt in the pockets of the British people. And the fact is that Burnham and Healey are winning that expectations battle. Kemi Badenoch is right when she warns that the structural problems undermining the British economy can no longer be ignored. But the Prime Minister seemingly believes they can be deferred one final time. And he may be right. Avoiding hard choices is cynical electoral politics. It may well compound those problems over the long term. Yet that doesn’t bother Burnham. His focus is increasingly on the snap election he plans to call early next year. So those confidently predicting that next Wednesday will derail that plan, and finally see the Burnham Bounce come crashing back to earth, should be careful not to play into his hands.