UK leader Keir Starmer supports Treasury chief amid accusations of misleading the public on the economy

LONDON (AP) British Prime Minister Keir Starmer on Monday defended Chancellor Rachel Reeves amid accusations from opposition parties that she misrepresented the countrys fiscal outlook prior to last weeks budget announcement.

Starmer asserted that no misleading occurred before Reeves tax-focused budget, which aims to generate revenue to reduce borrowing, fund infrastructure and public services, ease living costs, and stimulate economic growth.

In a speech three weeks ahead of the budget, Reeves prepared the public and markets for a potential increase in income tax rates, which would have contradicted a key election pledge. Following criticism from Labour lawmakers and an unexpectedly positive fiscal update, she scaled back, implementing smaller revenue-raising measures instead.

Opposition leaders claim Reeves was aware that forecasts from the independent Office for Budget Responsibility (OBR) were better than initially suggested when she delivered her speech. Both the Conservatives and the Scottish National Party have requested the Financial Conduct Authority to investigate Reeves statements and leaks prior to the budget. Reform U.K. leader Nigel Farage has called on the governments standards adviser to review her comments.

Reeves maintains she did not mislead the public or markets. She explained that the OBR had projected a 16 billion ($21 billion) shortfall in tax revenue due to a lower productivity forecast, smaller than previously reported, which prompted critics to suggest governmental deception. Reeves emphasized that her speech accurately reflected the OBRs assessment, stating the downgrade has had a big impact on the public finances, justifying the need for additional contributions from taxpayers.

The Labour government, elected in July 2024 with a pledge not to raise income taxes for working citizens, implemented 26 billion ($34 billion) in tax increases, mainly to create a financial buffer against future crises, partially conflicting with the spirit of its election promise.

Starmer, speaking at a London community center, argued that his administration inherited public finances and public services in total crisis after 14 years of Conservative rule. He defended measures to raise taxes, increase the minimum wage, and invest in public services aimed at reducing child poverty. We confronted reality, we took control of our future, and Britain is now back on track, Starmer said. Gradually, the country will feel relief from the burden of decline.

He added that the government intends to tackle two challenging priorities: reducing Britains rising welfare expenditures and strengthening ties with the European Union. These plans could provoke tensions within Labour ranks and draw criticism from pro-Brexit Conservatives and Reform politicians. Starmer criticized the 2020 EU exit deal, saying it significantly hurt our economy and stressed the need for a closer relationship with the EU going forward.

Author’s Analysis: Starmer Stands by Reeves Amid Fiscal Controversy

Prime Minister Keir Starmer has publicly defended Chancellor Rachel Reeves following accusations from opposition parties that she misrepresented the UK’s fiscal outlook prior to last week’s budget. Starmer emphasized that no misleading information was given and framed the budget as a necessary step to stabilize public finances, fund infrastructure, and support economic growth.

Reeves had warned of potential income tax increases in a pre-budget speech, which conflicted with Labour’s election pledge. After receiving a positive fiscal update, the government implemented smaller revenue-raising measures. Opposition parties claim Reeves was aware of stronger-than-expected forecasts, prompting calls for investigations by the Financial Conduct Authority and the government’s standards adviser.

Starmer highlighted that the Labour government inherited significant financial challenges after 14 years of Conservative rule. He defended the tax increases, the rise in the minimum wage, and planned public service investments as measures to reduce child poverty and restore economic stability. Starmer also outlined the government’s future priorities: reducing welfare expenditures and strengthening ties with the EU, acknowledging potential friction within his party and criticism from pro-Brexit factions.

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• UK leader Keir Starmer backs his Treasury chief over claims she misled the public about the economy