UK leader Keir Starmer backs his treasury chief over claims he misled the public about the economy

British Prime Minister keir starmer defended myself on monday treasure The opposition leader claims he misled the public and markets about the state of public finances ahead of last week’s Budget.

Starmer said there was “no confusion whatsoever”. Chancellor of the Exchequer Rachel Reeves‘The tax-hike budget, which the government hopes will raise funds to reduce government borrowing, invest in infrastructure and public services, reduce the cost of living and boost elusive economic growth.

Three weeks before the budget, Reeves gave a speech to prepare the public and markets for an increase in income tax rates, which would have broken a major election promise. After outrage among ruling Labor Party MPs and a better-than-expected update on public finances, he reversed course, opting for smaller revenue-boosting measures.

Opposition politicians allege that Reeves knew that the Independent Office for Budget Responsibility’s forecast was better than expected when he gave the speech.

The Conservatives and the Scottish National Party have asked the Financial Conduct Authority to investigate Reeves’ comments and leaks to the media ahead of the budget, and Reform UK leader Nigel Farage has urged the government’s standards adviser to investigate Reeves’ comments.

Reeves denies misleading the public or the markets. He said on Sunday that the OBR had assessed ahead of the budget that tax revenues would be 16 billion pounds ($21 billion) less than expected due to lower productivity forecasts. This is a smaller budget gap than previously reported, leading critics of the government to believe the government committed fraud.

Reeves said that in his speech he was right to say that “the OBR downgrade has had a big impact on the public finances. And that’s why I will need to ask people to contribute more.”

The government was elected with a landslide victory in July 2024 on the promise of not increasing taxes on the income of working people. Some of the 26 billion pounds ($34 billion) of tax increases in the budget, primarily meant to increase the buffer available to the government for any future shocks, broke the spirit, if not the letter, of that promise.

Starmer hit back in a speech at a community center on Monday LondonHe said his government inherited “public finances and public services in total crisis” after 14 years of Conservative government. He defended the decision to raise taxes, raise the minimum wage, and fund public services that would help lift children out of poverty.

“We faced reality, we took control of our future and Britain is now back on track,” Starmer said. “Slowly, you will see a country that no longer feels the burden of decline.”

He said the government would pursue two potentially risky actions: cutting Britain’s growing welfare bill and moving closer to the EU. The first of these risks angering Labor members, while the second will anger pro-Brexit Conservative and Reform politicians.

Starmer said the withdrawal deal negotiated before Britain left the European Union in 2020 had “damaged our economy significantly.”

“We need to keep moving towards a closer relationship with the EU,” he said.