UK treasurer didn’t mislead about economy, Starmer says

Prime Minister Keir Starmer said British finance minister Rachel Reeves did not mislead the public in her approach to the budget, adding that he thought they would have to break election promises to raise taxes at some point.

Reeves used his budget on 26 November to raise taxes by Stg26bn (US$52.5bn) but managed to avoid breaching Labour’s manifesto pledge not to raise some key taxes, such as income tax.

Reeves was accused of misleading the public by exaggerating the weakness of public finances in the run-up to the budget after the fiscal watchdog published a letter showing he had prior knowledge that the government was forecasting stronger tax revenue.

The need for big tax increases was discussed in the build-up to the event, but Reeves defended himself by saying he wanted to create a larger fiscal buffer.

Explaining the government’s budget preparation process, including lowering productivity forecasts, Starmer said it was inevitable that they would have to increase taxes.

“So there was nothing misleading here,” Starmer said.

“There was a point where we thought we needed to violate the manifesto to achieve what we wanted to achieve,” he said of the potential income tax increase.

“Then it became possible to do this without violating the manifesto.”