New Labour’s Chancellor Rachel Reeves leads from the front in Budget battle. Her days of preparation lead right into a pivotal twelve weeks that will shape the government and the nation’s economic future. Tour stop on a Birmingham housebuilding development. She fired off a three-minute outline of her commitment to fiscal responsibility. She dealt with fears over an alleged “£50bn black hole” in UK finances and categorically rejected those fears.
During the launch of the Budget process, set for November 26, Reeves showcased her hands-on approach by trying her hand at bricklaying. This move represented her dedication to spurring new housing construction and boosting economic development. While the announcement was monumental in many ways, her remarks foreshadowed some of the challenging decisions ahead.
Reeves also refused to take welfare cuts off the table, setting the stage for the tough fiscal realities that she will need to address. Following her controversial U-turn on disability benefits in July, she emphasized that any decisions would be made “in lockstep” with Number 10, indicating close collaboration with the Prime Minister’s office.
The Chancellor’s leadership is especially needed in an era of public finance skepticism. The Treasury has more and more sided with Number 10 – this started, in part, under Reeves’ stewardship. As Darren Jones recently assumed the newly-created Chief Secretary to the Prime Minister role, this change makes their bond even deeper.
Reeves can be expected stick to her borrowing fiscal rules. She has a monumental task ahead of her, given the chasm in public finances. She is digging in her heels. The Office for Budget Responsibility (OBR) deserves credit for its sticking necks out in warning. They say that “promises made are regularly broken,” speaking to the pressure Reeves is under as she addresses the issues of the new Budget ahead.
“The OBR have got an important job to do and their job is to produce four forecasts on the economy – not to give a running commentary on government policy.” – Rachel Reeves