Rachel Reeves denies lying about state of Britain’s finances

LONDON – Ms Rachel Reeves denied misleading the British public about the state of the Britain’s public finances ahead of her budget, as she faced ongoing criticism over her messaging in the run-up to Nov 26’s £26 billion (S$45 billion) package of tax hikes.

Asked on Sky News on Nov 30 if she’d lied to the public ahead of the budget, the Chancellor of the Exchequer said: “Of course I didn’t.”

Ms Reeves on Nov 4 gave an unusual pre-budget speech in which she implied she was facing a black hole in the public finances, setting the stage for tax hikes in her Nov 26 set-piece.

But after the Office for Budget Responsibility last week revealed the forecasts it gave the chancellor in the build-up to the budget, it became clear she already knew she was on course to meet her fiscal rules at the time of the speech.

That’s led to accusations from opposition politicians that Ms Reeves had misled the British public.

Ms Kemi Badenoch, leader of the main opposition Conservative Party, on Nov 29 sent an e-mail to supporters, saying Ms Reeves “sold her budget on a lie”. 

But the chancellor on Nov 30 defended her November speech, saying that a downgrade to productivity from the OBR was one of the biggest factors she had to contend with, and that she needed to raise taxes to improve her buffer against her fiscal rules.

The OBR forecast at the time showed her meeting her rules by a margin of £4.2 billion, down from the £9.9 billion buffer she had at her inaugural budget.

“I was clear I needed to rebuild those public finances,” Ms Reeves said, suggesting her move to more-than double the fiscal buffer would give the Bank of England space to continue to cut interest rates. “£4 billion is clearly not enough fiscal headroom.” BLOOMBERG