British Prime Minister Keir Starmer on Monday defended Chancellor of the Exchequer Rachel Reeves against opposition claims that she misled the public and financial markets ahead of the government’s first budget since taking power in July 2024.
The budget, announced last week, included approximately £26 billion ($34 billion) in tax increases aimed at reducing borrowing, funding public services, and supporting economic growth. The opposition has accused Reeves of giving inaccurate signals about the fiscal outlook in a public speech three weeks before the budget—suggesting a possible rise in income tax rates that ultimately did not materialize.
Speaking at a community center in London, Starmer stated, “There was no misleading,” and said the government had to address “public finances and public services in total crisis” inherited from the previous Conservative administration. He criticized the state of the economy left by 14 years of Conservative-led governments and emphasized that difficult economic decisions were necessary.
The controversy centers on a speech made by Reeves before the budget, in which she indicated that worsening economic forecasts would require greater public contributions, implicitly signaling a potential income tax hike. However, a subsequent improvement in fiscal projections from the independent Office for Budget Responsibility (OBR) reportedly allowed the government to scale back those larger tax increases in favor of smaller revenue-raising measures.
Opposition lawmakers from the Conservative Party and the Scottish National Party have requested that the Financial Conduct Authority investigate whether Reeves knowingly misled the public about the OBR’s forecasts. Nigel Farage, leader of Reform U.K., has also called for the government’s ethics watchdog to examine the matter.
Reeves has denied any wrongdoing. Speaking Sunday, she stated that OBR projections showed a £16 billion ($21 billion) drop in expected tax revenues due to a downgraded productivity forecast. “The OBR downgrade has had a big impact on the public finances. And that was why I would need to ask people to contribute more,” Reeves said.
The Labour government came to power on a pledge not to increase income taxes for working individuals. While the revenue measures introduced in the budget did not formally breach this promise, critics have argued they violated its spirit.
In his Monday speech, Starmer also said the government would pursue reforms aimed at reducing welfare spending and reshaping the United Kingdom’s relationship with the European Union. He said the Brexit agreement finalized in 2020 had “significantly hurt our economy” and emphasized, “We have to keep moving toward a closer relationship with the EU.”
