British finance minister Rachel Reeves on Sunday denied she misled the public over official forecasts ahead of this month’s budget, saying she had been honest about the need to build up a bigger financial buffer.
In a speech on November 4, Reeves appeared to lay the groundwork to break the Labour Party’s promise to voters before the 2024 election and raise income tax rates, citing a “weaker than previously thought” productivity performance.
In a letter published on Friday, the head of Britain’s budget watchdog said it had also provided the government with forecasts showing that its productivity downgrade was offset by increases in real wages and inflation – which Reeves did not mention.
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The letter added to questions about the government’s communications ahead of Wednesday’s budget.
November saw big swings in the British government bond market as investors grappled with shifts in tone from the government over the prospect of tax increases.
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Its publication prompted the opposition Conservative Party to demand that Reeves resign as Chancellor of the Exchequer for misleading the public about the economic situation ahead of her November 26 budget.