Prime Minister Sir Keir Starmer is set to throw his full support behind Chancellor Rachel Reeves' first Budget amid mounting controversy over claims about the UK's fiscal deficit.
Deficit Dispute Intensifies
The Chancellor faces intense scrutiny following revelations from the Office for Budget Responsibility (OBR) that contradict her pre-Budget warnings about a £20 billion fiscal black hole. Ms Reeves had suggested in a 4 November speech that tax rises were necessary due to poor productivity's consequences for public finances.
However, the spending watchdog disclosed it had informed the Treasury as early as 17 September that improved tax revenue from rising wages and inflation had significantly reduced the shortfall. By October, the OBR confirmed the deficit had been completely eliminated.
Government's Firm Defence
Downing Street has vigorously defended the Chancellor, with sources stating: "No 10 was aware of the content of the speech, which we believe entirely accurately outlined the need to raise revenues." They dismissed allegations of misleading voters as "categorically untrue".
The government maintains that the OBR forecasts didn't account for increased spending from scrapping the two-child benefit cap and reversing winter fuel payment and welfare cut decisions.
Starmer's Growth Agenda
In a speech on Monday, Sir Keir will endorse Ms Reeves' Budget choices while pushing for accelerated economic expansion. He will praise the Budget for tackling living costs and ensuring stability through greater fiscal headroom and lower inflation.
The Prime Minister will declare that "economic growth is beating the forecasts" but insist the government must go "further and faster" to encourage it.
Key initiatives include:
- Reforms to nuclear power plant construction to reduce red tape
- A record £7.3 billion investment in local roads maintenance
- Accelerated implementation of Labour's industrial strategy
Business Secretary Peter Kyle will lead efforts to apply deregulatory approaches to major infrastructure projects.
Opposition Demands Investigation
Tory shadow chancellor Sir Mel Stride has written to the Financial Conduct Authority urging an inquiry into "possible market abuse" from what he calls misleading comments. SNP Westminster leader Stephen Flynn has similarly called for an investigation into whether Ms Reeves' November speech constituted market manipulation.
Despite the controversy, Ms Reeves has insisted she will remain Chancellor for years to come, with the Treasury emphasising that the Budget choices were designed to cut living costs, reduce hospital waiting lists and double fiscal headroom.
