Gemini Budget Prediction: Reeves’s £ Billion Gamble Chancellor U-Turns On Tax

If you are joining part way through this series, here is the quick context. Two weeks before the Chancellor delivered the Budget, I asked four leading AI models to run deep research and predict what Rachel Reeves was likely to announce. Every model received the same ten page brief and produced a long form analysis followed by a shorter public facing summary.

Gemini approaches complex problems like an economist. It looks for patterns, historic parallels and long term incentives rather than reacting to short term noise. It is the most structural of the four models, and it often produces predictions by thinking several steps ahead. This post shows how Gemini interpreted the Budget challenge through an economic and behavioural lens.

What surprised me most about Gemini’s analysis was how quickly it stepped back from the headlines and focused on the underlying pressures shaping this Budget. While other models opened with context, Gemini opened with constraints. Debt rules, weak productivity, borrowing forecasts and the political cost of breaking the tax pledge. It treated the Budget as a long term economic puzzle rather than a political set piece.

Gemini also took a clear and deliberate risk.
It assumed Reeves would prioritise structural fixes over short term giveaways, even at the cost of public sentiment. That is not an obvious position, but the model justified it using historic patterns, incentive structures and the behaviour of previous Chancellors under similar pressure. It read the moment through cause and effect rather than commentary.

Below is the summary Gemini produced after completing the full research brief.

The aim is simple. To show SME leaders what AI can do when you push it beyond short prompts. Each model thinks differently, and the differences reveal how AI reasons, where it adds value and where it needs human judgement.

Reeves’s £ Billion Gamble: Chancellor U-Turns On Tax, Raids Pensions And Property

Here are the top ten changes expected in the Chancellor's Budget.

High: Front page of the speech: The Chancellor will confirm that the headline rates of Income Tax, National Insurance, and VAT will not rise , following a major U-turn forced by a party rebellion.

High: Front page of the speech: The existing freeze on all income tax and National Insurance thresholds will be extended by at least two more years, likely to . This "fiscal drag" is a major stealth tax.

High: Front page of the speech: The controversial two-child benefit cap will be fully and finally abolished , a significant political move to placate the party's left wing.

High: Front page of the speech: The Budget will confirm there is no new money for public sector pay , locking in real-terms pay cuts to balance day-to-day spending.

High: Front page of the speech: The Chancellor will confirm the NHS must absorb the cost of its redundancy programme from within its existing budget , rejecting pleas for new money.

Medium: Could sneak into the small print: A "Mansion Tax by Stealth" will be introduced , most likely by doubling Council Tax liability for all homes in Bands G and H.

Medium: Could sneak into the small print: The abolition of the two-child cap will be partially funded by raiding green investment , specifically by slashing the ECO home insulation scheme.

Medium: Could sneak into the small print: There will be a new clampdown on pension tax relief , with salary sacrifice schemes the most likely target , potentially hitting millions of savers.

Medium: Could sneak into the small print: A new "War on Professionals" will launch a £ billion tax raid on high-earning partners in Limited Liability Partnerships (LLPs) , framed as closing a "loophole".

Medium: Could sneak into the small print: A "smorgasbord" of smaller revenue-raisers will be used to fill the remaining gap, including a new levy on banks and higher taxes on online gambling.

The Anatomy of a Political Budget

This Budget is set to be defined by a political U-turn that has reshaped the nation's finances. For weeks, the Treasury briefed that a grim OBR forecast made breaking the manifesto pledge on income tax inevitable. Now, that tax rise is dead. The Chancellor’s public explanation will be that the final OBR forecast improved, revealing the fiscal gap was not £ billion, but a smaller £ billion. This is a convenient fiction. The reality is that a catastrophic internal party rebellion , threatening the Prime Minister's leadership , forced the reversal.

This decision has damaged the Chancellor's reputation for fiscal purity. Markets, which saw the "credible" income tax rise as a sign of seriousness, were spooked by the U-turn. The cost of UK government borrowing has risen as a result , as investors now see a Chancellor forced to plug a £ billion hole with a messy "smorgasbord" of stealth taxes. The Budget reveals a Chancellor governing in contradiction to her own mandate. While she adheres to the letter of her tax pledge by not raising rates, she shreds its spirit. This is done by extending the freeze on tax thresholds , a far larger and less honest tax rise that will pull millions of workers and pensioners into paying tax.

Furthermore, analysis shows a "Great Policy Swap" that sacrifices a core manifesto mission. The Chancellor is cutting the "Warm Homes Plan" (the ECO insulation scheme ) in order to fund a policy that was not in the manifesto at all: the £ billion-plus abolition of the two-child benefit cap. This proves that party management has replaced the mandate. On the spending side, the promise to "rebuild Britain" is over, replaced by a new, "honest" austerity. The public battle with the Health Secretary, where she refused to grant £ billion in new money for NHS redundancies, is symbolic. The message is that the NHS, and the wider public sector, must fund its own restructuring. 

This new age of austerity is confirmed by the public sector pay template: a proposed . per cent total pay rise for teachers over three years. This locks in deep, real-terms pay cuts and risks a new winter of industrial action. Ultimately, this is not a Budget for growth. The business community, already reeling from the Employer National Insurance hike and the refusal to restore VAT-free shopping, sees this package as chaotic. Confidence among small firms is at a record low. This is a Budget built for one purpose: political survival.

The Strictly Budget Happiness Scale: Off-Beat Quickstep

This was a routine stamped with good intentions but thrown into chaos by a catastrophic loss of timing. The Chancellor’s main move, the income tax U-turn, threw the entire performance off-balance. She has broken the spirit of her core manifesto tax pledge and sacrificed the manifesto's "Warm Homes Plan" to pay for a crowd-pleasing social policy. The rest of the dance was a "smorgasbord" of awkward, joyless, and uncoordinated steps , from the stealth tax on homeowners to the clumsy raid on professional savings. The judges sigh with disappointment ; the crowd is not cheering, it is wincing.

Strictly Political Survival Scale: Shirley: Foxtrotting with Flair

While the Budget may be an economic mess, it is a political triumph for the Chancellor. This performance was all about survival. Rachel Reeves faced a leadership-ending catastrophe over the income tax pledge. She "stumbled" badly, but by executing the U-turn, she saved not only herself but her Prime Minister. She has brilliantly wrong-footed her internal critics by simultaneously delivering the totemic "win" of scrapping the two-child benefit cap. She exits this crisis having tarnished her fiscal reputation but having cemented her political power. She is, without doubt, still leading the dance.

When you compare all four models, Gemini stands out for one thing.

It builds a case from economic first principles. It is less influenced by political tone and more focused on the logical consequences of the numbers. That gives it a different kind of clarity. You can see the assumptions. You can see the reasoning. And you can see how the model arrives at its conclusions. This is why multi model comparison matters. ChatGPT gives you structure. Claude gives you context. Gemini gives you long term logic. Perplexity gives you breadth. Together they reveal a far clearer picture than any one model can produce alone.

Next, we move to Perplexity, which approached the same challenge with speed, breadth and a very different reading of the political signals.