Chancellor John Healey’s upcoming Budget on Wednesday marks a significant test for the new Labour government and presents strategic challenges for the country’s rightwing opposition, particularly the Conservative Party and Reform UK. Both parties are seeking to distinguish themselves by outlining their critiques of the government’s economic approach and presenting alternative fiscal policies.

Conservative leader Kemi Badenoch has signaled a firm stance on fiscal discipline, calling on the government to control borrowing and highlighting her party’s commitment to deficit reduction primarily through welfare spending cuts. This stance builds on her response to the previous Budget, which helped elevate her profile within the party. Meanwhile, Reform UK leader Nigel Farage has also focused criticism on welfare expenditure, accusing the government of excessive benefits provision that he warned could lead to economic insolvency.

The government’s decision to delay the release of two key welfare reform reports—the Milburn report focused on young people not in employment, education, or training, and the Timms report on disability benefits—until after the Budget may limit these parties' ability to fully leverage welfare as an attack point. Political analyst Tim Bale noted that if Healey signals intentions to address welfare reform, it could complicate opposition efforts to make their case against Labour’s fiscal policies prior to detailed government plans being unveiled.

At the Conservative Party’s annual conference earlier this month, Badenoch shifted the party’s emphasis from migration to economic issues, advocating a Thatcherite agenda of tax reduction, spending cuts, and deregulation. However, the party’s long tenure in government, characterized by significant borrowing increases and elevated tax levels, remains a point of voter skepticism. Recent polling shows Labour and the Conservatives tied at 21% each in economic trust, with Reform trailing at 12%.

Both opposition parties are also pressing Labour on defence spending. They urge Healey to commit to allocating 3% of GDP to the military by 2030, a target that contributed to Healey’s resignation as defence secretary in June and, subsequently, the resignation of former Prime Minister Sir Keir Starmer. Badenoch described any delay on defence funding commitments beyond the Budget as “unconscionable.” Reform’s Treasury spokesperson Robert Jenrick labeled Healey’s stance a “betrayal,” while Farage pledged to eliminate taxes on military reservists’ pay.

As leader of the official opposition, Badenoch is set to respond to the Budget in the House of Commons, a platform Reform’s smaller parliamentary presence limits. Farage and Jenrick plan to release an alternative Budget ahead of Healey’s announcement, aiming to showcase their party’s readiness to govern. They have cast Labour as incapable of true welfare reform and cautioned about an impending economic crisis.

While Healey is anticipated to introduce tax increases, including measures targeting the banking sector, the Conservatives and Reform are offering contrasting tax-cut proposals. Badenoch has prioritized substantial inheritance tax reductions, a move criticized as favoring wealthier individuals, whereas Reform advocates for raising the tax-free personal allowance from £12,570 to £15,000 to benefit lower- and middle-income earners.

Both opposition parties will issue immediate responses to the Budget on the day of its release, seeking to capitalize on any surprises Healey might unveil. Helen Miller, director of the Institute for Fiscal Studies, noted that chancellors often attempt to produce unexpected measures and that opposition parties will be scrutinizing these closely for opportunities to mount effective critiques.