Rachel Reeves, UK Shadow Chancellor, promising to challenge doom mongering prophecy of Britain’s economy. She’s preparing for her key budget speech next month. Reeves admits the shortfall in public finances is bigger than previously anticipated. She does not shy away from admitting that her government amidst major global challenges will not go back to austerity times.
In a rare moment of honesty, Reeves admitted the £20 billion gap in delivering her tax pledges and spending promises. As millions of households all over the UK continue to feel the effects of soaring food and energy prices, that very recognition underscores the difficult economic reality we’re all grappling with.
We can expect the Office for Budget Responsibility (OBR) to present their own findings about the economic outlook next month. Looking forward to hearing their thoughts when budget day arrives! Understanding the criticism that is on the horizon, Reeves has put together an expansive, proactive playbook to address and diffuse those predicted bad reviews. She portrays herself as a leader willing to tackle the country’s economic storm clouds head on.
“Those conclusions [by the OBR] will be delivered at the budget next month and I am not going to pre-empt them. But I am going to be candid now that the productivity performance we inherited from the previous Conservative government and since the financial crisis has been too weak,” – Rachel Reeves
Reeves has rightly been a vocal critic of the UK’s historically stagnant productivity levels. She attributes some of the ongoing challenges to the legacy of the last Conservative government, including the triple whammy of Brexit and the Covid pandemic. She argues that these factors have caused “deep scars” on the economy.
“Austerity, a chaotic Brexit and the pandemic have left deep scars on the British economy that are still being felt today,” – Rachel Reeves
Last year Reeves shockingly managed to get away with presenting a budget featuring £40 billion worth of tax rises. This plan controversially increased National Insurance Contributions for employers alone. In her proposed budget, she first pledged not to seek any additional tax increases. A negative bump in productivity projections could make her reconsider that choice.
Reeves is committed to addressing economic disparity. To her first point, she’s not wrong—most working people in this country feel like the economy is failing them.
“I don’t need a spreadsheet to tell me that too many working people in Britain feel the economy is unfair and does not work for them, with the cost of living still bearing down on family budgets,” – Rachel Reeves
We’re pleased to see Reeves recognize that our country and economy are at an inflection point. He continues to reject ideas that lead back to austerity as a solution. She noted that she’ll be watching closely any new taxes proposed in the next budget. This important decision recognizes the historic pressures households are struggling with.
The next budget will be an important test for Reeves and her party. They have to be fiscally prudent yet respond to the very real needs of people using their services who are facing a cost-of-living crisis. The decisions made will have long-term consequences for public finances and economic stability in the UK.