British finance minister Rachel Reeves has denied accusations that she misled the public over official forecasts ahead of this month’s budget, insisting she was transparent about the need to strengthen the country’s fiscal buffer.
Reeves came under scrutiny after a November 4 speech in which she cited weaker-than-expected productivity as a reason for potentially tough fiscal measures, raising speculation that Labour could break its election pledge not to increase income tax rates. However, a letter published Friday by the head of the Office for Budget Responsibility (OBR) revealed that the watchdog had also provided forecasts showing productivity losses were offset by higher real wages and inflation—details Reeves did not mention.
The disclosure added to questions about government communications in the run-up to Wednesday’s budget, which triggered sharp swings in the bond market as investors weighed the likelihood of tax hikes. The opposition Conservative Party seized on the letter, demanding Reeves resign for allegedly misleading the public.
Reeves dismissed the calls, telling the BBC she intended to remain in her post “for a long time.” “I have been underestimated all the way through my life,” she said. “I’m proud of my budget this week.”
Confidential OBR forecasts given to Reeves before her November speech showed she would meet fiscal rules with a margin of £4.2 billion, excluding budget measures and the reversal of welfare cuts earlier in the year. On Sunday, she told Sky News that such a narrow buffer was inadequate by historical standards and risked limiting the Bank of England’s ability to cut interest rates. “The just over 4 billion pounds surplus was not enough,” she said.
When Reeves unveiled her budget on Wednesday, she had more than doubled her headroom against fiscal rules to £21.7 billion, up from £9.9 billion in her previous plan.
