For weeks, Labour MPs and officials have worried their government was drifting, dogged by controversies over freebies and donations, and unable to show voters its defining mission. On Wednesday that changed, for better or for worse.

Announcing the biggest tax-raising budget for decades, along with a rapid injection of cash for health and education, Rachel Reeves made this government’s priorities clear to her party and the country.

For all Labour’s talk of being pro-business and pro-growth, when forced to make choices, the chancellor chose to tax the rich, shore up public services and give more money to low-paid workers. “I finally got the politics I always wanted,” said one relieved Downing Street staffer.

That message was underlined by the deputy prime minister, Angela Rayner, in an opinion article for the Guardian on Friday. It was “a budget for working people, by a government for working people”, she wrote.

“This budget is not only a set of policies but a bold political vision that breaks with the past and begins a new chapter,” she added. “It is an era-defining moment driven by Labour values. We have nailed our colours to the mast.”

As Reeves heads into a weekend of media appearances, government officials say the early feedback from focus groups has been encouraging. “The sense we are picking up from voters is mainly one of relief,” said one. “They were expecting the budget to be bad, but it’s not been as bad as it could have been.”

Early polls suggest this optimism might be misplaced, however. A survey by BMG for the i newspaper found 40% of respondents felt negative about the budget, compared with 25% who were positive. The same poll gave the Conservatives an overall poll lead for the first time since 2021.

Officials say they have used the budget to target a specific group, which they define as people who get paid monthly with a payslip, who drive cars and who use the NHS. “These people are recognising that a choice has been taken to increase taxes on businesses and the wealthiest but to protect them,” one official said.

But although the tone among Labour MPs and staff is upbeat, they know several clouds hang over the budget announcement.

The first is the reaction of the markets, where investor concerns about how much Reeves is planning to borrow have sent the pound lower and the cost of borrowing higher. Things moved so quickly that at one point it looked as if higher borrowing costs might cause the chancellor to miss her fiscal targets.

The market moves subsided slightly on Friday afternoon, but with the pound at a two-month low against the dollar, investors are keeping the UK on their watch list.

Moody’s, the credit rating agency, said it expected markets to be “more sensitive to the potential for UK policy missteps, because of the gilt market turmoil that followed the September 2022 mini-budget”.

Meanwhile, ministers are dealing with the fallout from the rise in employer national insurance contributions for various sectors. Wes Streeting, the health secretary, will have to placate angry GPs and worried social care providers, many of whom aresaying they may go bust because of the combination of higher taxes and the higher minimum wage.

Steve Reed, the environment secretary, tried to damp down the anger among farmers on Friday about the imposition of inheritance tax on some agricultural land. Writing in the Telegraph, he said: “I completely understand farmers’ anxiety at any changes. But rural communities need a better NHS, affordable housing and public transport we can provide if we make the system fairer.”

Farmers, however, intend to stage a rally in Westminster later this month, the spectre of which is making Labour officials nervous.

One said: “As soon as [the inheritance tax change for agriculture] was announced I thought: ‘Uh oh, this could be a tricky one.’ It’s too early to say if it will blow up, but if you had to pick one part of the budget that feels likely to drag on and maybe need a tweak, it’s that.’”

While MPs and officials are conscious that many of the individual budget measures could still cause them serious problems, many are pleased to have a clear message for voters. This was a point hammered home by Reeves when she addressed the parliamentary party on Wednesday evening.

“Her message to MPs was clear,” said one Labour official. “This budget has given us something to campaign on – we’ve made our choices, now it is time to sell them.”

Additional reporting by Richard Partington and Helena Horton