UK chancellor pledges to ‘defy’ gloomy economic predictions
(MENAFN) Chancellor Rachel Reeves has pledged to “defy” pessimistic economic forecasts as the UK faces a larger-than-expected shortfall in public finances. The Office for Budget Responsibility (OBR) is expected to lower its projection for the country’s productivity—output per hour worked—which could create a $24.9 billion gap in meeting the government’s tax and spending targets and increase pressure for higher taxes at the upcoming Autumn Budget.
Reeves told the Guardian that she would not “pre-empt” the OBR’s assessment but emphasized her determination to challenge the forecasts rather than simply accept them. She noted that the UK’s productivity has lagged since the financial crisis and under the previous Conservative government, contributing to the current fiscal pressures.
Speculation is growing over potential tax and spending decisions, with economists at the Institute for Fiscal Studies calculating a $27.4 billion shortfall and warning that tax increases may be “almost certain.” Reeves, who implemented $49.7 billion in tax rises in last year’s Budget, including higher National Insurance contributions, has said she is “not coming back” for additional hikes but could face limited options if public spending is not cut or borrowing increased.
The chancellor has framed the current economic challenges as the result of austerity, Brexit, and the Covid pandemic. She stressed investment as the solution to low productivity, pledging funding for the NHS, transport infrastructure, energy, and defense to “get Britain building.”
Reeves reiterated that there would be “no return to austerity,” signaling that maintaining fiscal credibility may require difficult choices in the coming Budget.
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