Critics see Rachel Reeves as betraying her election manifesto tax promises; but she may well be trying ‘The Lady’s Not for Turning’ gambit. Her speech from Downing Street delivered before the markets opened on Tuesday, resembled – in content, if not in style – Margaret Thatcher’s 1980 party conference speech. In both cases, the incoming government had failed to get public spending and borrowing under control. (Indeed, government borrowing costs then were 6 per cent of GDP, compared with a mere 5.1 per cent today.) Also in both cases, the government sought simultaneously to go against earlier promises not to raise taxes, yet to do so in the name of long-term consistency. Both faced what was then called ‘a funding crisis’ in the bond market. When the 1981 Budget came along, it put up taxes, chiefly by not indexing tax thresholds. Famously, it was attacked in a letter to the Times by 364 economists who preferred reflation. The fact that Ms Reeves speaks suddenly, so soon before the Budget, has a panicky, emergency air which Mrs Thatcher also felt but more successfully concealed. Their situation is similar – apparent policy failure and the prospect of a collapse of public, market and political confidence. In 1981, however, Mrs Thatcher pulled through, starting to reap economic rewards the following year. Perhaps Ms Reeves will achieve a comparable upturn. I do doubt it, though. In the run-up to the 1981 Budget, Nigel Lawson,........

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