Splitting the Treasury Could End Budget Obsession in Britain

Britain’s economic calendar has become crowded with fiscal events, creating an unusual level of anticipation and controversy that distinguishes it from most other major economies. The spectacle of spring statements and autumn budgets, delivered with flourish, often overshadows the substance of policy changes and leaves the public fixated on political theatre rather than long-term fiscal strategy.

Much of this intensity can be attributed to the structure of the Treasury, which holds an exceptional concentration of power among Western finance ministries. In the United Kingdom, the chancellor and Treasury officials oversee both the public finances and the economic strategy, combining responsibilities for tax, spending plans, and growth policy. This centralisation contrasts sharply with the executive arrangements in most European countries, where duties are divided between ministries for finance and economic affairs. As a consequence, British budgets are subject to heightened scrutiny, intense lobbying, and considerable political risk for chancellors attempting to navigate self-imposed fiscal rules.

Past incidents, such as the widely criticised 2012 budget dubbed the omnishambles, illustrate how budgets are remembered not for their economic impact but for perceived missteps. In European Union member states, by contrast, the process of drafting budgets is largely technocratic, with little public drama. Often, governments roll over existing spending policies even during periods of political instability, minimising market unrest and reducing media attention.

This uniquely British fixation has been the subject of increasing calls for reform. Some politicians and think tanks argue that the Treasury should be separated into a dedicated economics ministry and a budget ministry. This division, proponents say, would align the UK with international best practice and encourage a more strategic approach to economic growth. Critics of the current system claim that the Treasury’s accountancy-driven culture hampers broader economic planning. Former chancellor Jeremy Hunt, for example, pointed to a lack of focus on how to expand the economy, with decisions driven by short-term fiscal constraints rather than long-term vision.

There have been steps towards change, including enhanced economic oversight from the Prime Minister’s office and the appointment of a chief economic adviser at Number 10. However, these measures have not significantly diminished the Treasury’s authority within Whitehall. Structural reform, such as the creation of a Department of the Prime Minister and Cabinet, would require the cooperation of the Treasury and could centralise strategic decision making at the heart of government.

Oversight bodies such as the Office for Budget Responsibility now wield considerable influence, shaping fiscal decisions with their economic forecasts. Some propose the establishment of a new Office for Fiscal Transparency to counter what is perceived as a doom loop, whereby forecasts drive policy instead of supporting it. The International Monetary Fund has suggested reducing the number of annual headroom calculations, an idea the Treasury is reviewing, as a way to lower political and market volatility linked to budget announcements.