Budget here Vs. Budget there

A Comparative Analysis of the Budget Systems in Nepal and the United Kingdom: Challenges, Flaws, and Future Outlook

Last week, Rachel Reeves made history as the first female Chancellor to present the UK budget, closing over 14 years of Conservative rule. Her budget, positioned as a fresh start, sought to tackle economic stagnation, rising debt, and public service underfunding. Reeves emphasized Labour’s commitment to “more pounds in people’s pockets” and a decade of “national renewal,” pledging to improve living standards by investing in key areas for economic growth. The new budget includes a tax increase of ￡40 billion, framed as a foundation for “invest, invest, invest” reforms to drive economic revival. Despite these ambitions, the real test is whether these plans can foster genuine, lasting change amid deep-rooted political and economic divides.

Budgeting is at the core of every government’s roadmap for national growth, public welfare, and economic stability. However, the priorities, processes, and challenges of budgeting reflect each country’s unique political, economic, and social contexts. Nepal, as a developing nation, and the United Kingdom, as a developed economy, demonstrate vastly different approaches to budget formulation but share common issues like debt, economic downturns, and illusory tactics in public presentation. This article takes a critical look at these budget systems, the prevalent blame games, flawed allocations, and an uncertain future for both countries and the global economy as a whole.

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1.????? Budgetary Frameworks and Political Dynamics

Nepal: Nepal’s federal budgetary system, still evolving since the adoption of a federal structure in 2015, divides responsibilities across federal, provincial, and local governments. Yet, this process is often clouded by political friction and lack of coordination, leading to delayed funding and sluggish implementation. Political blame-shifting among parties is common, with each new administration holding previous governments responsible for budget inefficiencies and gaps in execution.

United Kingdom: In the UK, the budgeting process is centralized under HM Treasury, with some budgetary authority devolved to Scotland, Wales, and Northern Ireland. Recently, political tensions have intensified as the Labour Party, now in power, has criticized the previous Conservative government for today’s economic hardships. Labour’s stance has been to attribute rising debt, stagnant growth, and social spending cuts to Conservative policies, portraying them as the primary cause of current fiscal struggles and the disastrous NHS. However, critics argue that as the main opposition for years, Labour was also part of the political landscape and bears some responsibility for not pushing for timely reforms. This “blame game” highlights the complexities and politicization inherent in budgetary processes.

2.???? The “Smoke and Mirrors” of Budget Presentation

Both countries have been accused of using budget presentations that some critics describe as “smoke and mirrors.”

Nepal: In Nepal, ambitious budget announcements for infrastructure and social welfare are often at odds with the reality of budget constraints. Large portions of the budget remain unutilized due to administrative inefficiencies, while impressive figures and projections are presented to the public to convey economic progress. This practice creates a disconnect between official statements and actual project outcomes, leaving citizens disillusioned when promised developments fail to materialize.

United Kingdom: The UK government has also been criticized for presenting budgets in ways that appear to address public concerns but often conceal underlying fiscal challenges. For example, while the budget highlights a significant ￡22.6 billion increase in day-to-day health spending and a ￡3.1 billion boost for capital investment—allocating ￡1 billion for repairs, ￡1.5 billion for new beds, and additional testing capacity—critics point out that this may not offset existing funding gaps or address core issues in the NHS. Additionally, Reeves’s commitment to a 10-year NHS plan with a target of 2% productivity growth by next year could face challenges, given the structural issues within the system. This “smoke and mirrors” approach provides an illusion of immediate gains while leaving structural issues of debt and underfunded services largely unaddressed.

3.???? Flaws in Budget Allocations

Nepal: Nepal’s budget reflects significant imbalances in spending, with defence and administrative costs often receiving more funding than critical areas like healthcare and education. These allocations are frequently questioned, especially given Nepal’s pressing need to invest in human capital development. The emphasis on defence, despite limited external threats, diverts resources away from sectors essential for sustainable growth, such as public health, rural development, and job creation.

United Kingdom: In the UK, increased defence spending has taken priority, with an announced ￡2.9 billion increase next year and a rise from ￡52.8 billion in 2022-23 to ￡54.2 billion in 2023-24. While this spending is justified as essential to national security, it diverts funds from social investments, exacerbating existing underfunding in the NHS and education sectors. Moreover, the introduction of VAT on private school fees from January 2025 is expected to generate additional revenue, though critics argue that these funds should be more directly allocated to public education for broader societal benefits.

4.???? Economic Trends, Debt, and Budget Deficits

Nepal: Nepal relies heavily on foreign aid, remittances, and domestic borrowing to fund its budget, and rising debt is an increasing concern. With slow growth, the government faces ongoing challenges in generating sufficient revenue. These fiscal issues make Nepal vulnerable to external shocks, and the dependence on international loans creates a cycle of debt that diverts funds from development projects.

United Kingdom: The UK’s growing debt, worsened by economic stagnation, poses significant challenges to its budget. Reeves announced a new rule to curb borrowing for day-to-day spending, aiming to balance the current budget within three years. Forecasts predict a deficit of ￡26.2 billion by 2026, with an expected surplus of ￡10.9 billion in 2027-28, followed by ￡9.3 billion in 2028-29 and ￡9.9 billion in 2029-30. Public sector net debt, estimated at ￡127 billion in 2024-25, is projected to gradually decrease to ￡70.6 billion by 2029-30. However, these optimistic figures rely on improved economic conditions, leaving questions about the feasibility of reaching such targets.

5.???? Transparency, Accountability, and the Political “Blame Game”

Nepal: Budget accountability is hindered by frequent political changes (to be more precise we have got 14 prime misters in the last 16 years of Federalism) and lack of consistent oversight. Each government often holds the previous one accountable for budgetary shortfalls, perpetuating a blame game that obscures responsibility. Corruption, inefficiencies, and lack of transparency further weaken the budget system, creating challenges in tracking funds and assessing project outcomes. Despite efforts at reform, the impact remains limited, as weak oversight mechanisms fail to enforce genuine accountability.

United Kingdom: Although the UK has established transparency mechanisms such as the National Audit Office (NAO) and the Office for Budget Responsibility (OBR), the political blame game is pervasive. Labour’s criticism of Conservative economic management has become a focal point of current debates. By attributing the debt and economic slowdown entirely to Conservative policies, Labour sidesteps its role as a long-standing opposition that could have pushed for alternative policies. This finger-pointing erodes public trust, as citizens grow sceptical of political agendas that focus more on assigning blame than on enacting effective reforms.

6.???? Future Outlook: Uncertain Paths Ahead

Nepal: Nepal’s budgetary challenges are not expected to ease soon. Unless there is a shift toward more effective prioritization of health, education, and infrastructure, the country risks long-term economic stagnation and continued reliance on debt. Political reforms and a commitment to genuine accountability will be essential in transforming the budget from a political tool into a driver of progress.

United Kingdom: The UK’s fiscal future is similarly bleak, with mounting debt, slow growth, and continued political division. Without proactive measures, the UK may face continued economic stagnation, under-funded public services, and growing public discontent. This outlook underscores the need for policy reforms that address core fiscal weaknesses rather than relying on deceptive presentation to create an illusion of progress.

Conclusion

While Nepal and the UK differ in their economic development stages, their budget systems reveal shared issues in political dynamics, transparency, debt, and future viability. Both countries’ budgets, at times a case of “smoke and mirrors,” present ambitious figures that mask underlying vulnerabilities. The future will require greater accountability, transparency, and commitment to sustainable reforms if both countries hope to address the real issues behind their budgets. Ultimately, no matter how promising the figures are on paper or how impressive the projected GDP growth is, development is only meaningful when it tangibly improves people’s lives.