Shadow chancellor Rachel Reeves has warned that a Labour government would face 'almost impossible trade-offs' on tax and spending if the economy fails to grow. Speaking ahead of a major speech to business leaders, she said expanding the economy was the only way to increase funding for public services.
In her address at the annual Mais Lecture in the City of London, Ms Reeves vowed to bring about a 'new chapter in Britain's economic history' and promised to reform the Treasury. She proposed reinstating a unit focused on growth and high productivity to inform budget decisions, and giving the Office for Budget Responsibility a stronger role in advising on long-term spending for growth.
Ms Reeves said Labour would maintain the current fiscal rule that public debt must fall as a share of the economy by the fifth year of an official forecast. She also pledged to end chancellors' ability to scrap fiscal rules unless the OBR declared an economic crisis.
The Confederation of British Industry's chief economist Louise Hellem backed the focus on growth through business investment, while Unite union general secretary Sharon Graham accused Labour of pandering to profiteers and sticking to 'phoney fiscal rules'. The Conservatives criticised Labour for having 'no plan - just more borrowing and more taxes'.
