Rachel Reeves has refused to rule out tax rises in this month’s budget, insisting she must “deal with the world as I find it, not the world as I might wish it to be”. The chancellor signalled a potential breach of Labour’s manifesto commitment on income tax, citing worse-than-expected public finances after “years of economic mismanagement”.
In an early-morning Downing Street press conference, Reeves said that “each of us must do our bit” for the country’s future, adding that challenges such as global tariffs, sticky inflation, volatile supply chains and defence spending had intensified since last year’s financial statement. She argued she would not duck difficult choices, even if they proved unpopular.
Reeves accused previous governments of putting “political convenience” ahead of “economic imperative” and raiding capital budgets. She insisted she was “being honest with people” about the need for tax rises, rather than cutting capital spending or making up numbers. The chancellor dismissed Reform UK’s plans as “fantasy” economics.
Reeves rejected calls to sidestep fiscal rules and raise borrowing, stating that “no accounting trick can change the basic fact that government debt is sold on financial markets”. She said her budget would focus on the NHS, easing the cost of living, and reducing national debt.
Conservative leader Kemi Badenoch described Reeves’s approach as “a masterclass in managed decline” and accused her of avoiding responsibility. “If she had a plan, she would be talking about what she was going to do other than tax rises,” Badenoch said, adding that unemployment had risen every month since Labour took office.
