Rachel Reeves has refused to rule out tax rises in this month鈥檚 Budget.
In an unusual pre-Budget news conference in Downing Street, the Chancellor hinted that she would break a Labour election manifesto commitment not to increase income tax, VAT or national insurance.
Against the backdrop of an estimated 拢20-30 billion shortfall in the public finances – with The Office for Budget Responsibility set to downgrade the UK’s productivity forecast聽– Reeves said the country was in a worse state financially than they had expected after 鈥測ears of [Conservative] economic mismanagement鈥�.
鈥淚f we have to build the future of Britain together, we will all have to contribute to that effort,鈥� she told reporters.
鈥淎s Chancellor, I have to face the world as it is, not the world that I want it to be. And when challenges come our way, the only question is how to respond to them, not whether to respond, or not.鈥�
Last year’s Budget was the biggest tax-raising fiscal event since 1993 but Reeves highlighted worsening global economic factors including global tariffs, volatile supply chains and increased defence spending as she seemed to prepare the country for an unexpected tax hit.
The UK currently has 拢2.6 trillion of national debt, which is 94% of its GDP.
鈥淚 put our public finances back on a firm footing, provided an urgent cash injection into faltering public services and began rebuilding our economy,鈥� Reeves said. 鈥淏ut since that Budget, the world has thrown even more challenges our way.
鈥淚 could do what previous governments have done, which is to sweep those challenges under the carpet, to cut capital spending, to make the numbers up.
鈥淏ut then we鈥檇 be back here in a year, in five years鈥� time, with productivity still on its knees, growth underperforming, national debt continuing to rise. So I鈥檓 being honest with people.
鈥淭he problem of the last 14 years is that political expediency always came above the national interest. And that is why we are in the mess that we are in today.鈥�
She added: 鈥淣o accounting trick can change the basic fact that government debt is sold on financial markets. The more that we try to sell, the more it will cost us.聽
鈥淚t is important that everyone, the public and politicians understand that reality.鈥�
UK regulator deepens probe into 拢3bn Getty-Shutterstock merger
Tory leader Kemi Badenoch said the Chancellor has overseen 鈥渁 masterclass in managed decline鈥�, adding: 鈥淚t is utterly ridiculous to see Rachel Reeves stand there blaming everybody except herself.
鈥淚f she had a plan, she would be talking about what she was going to do other than tax rises. All she鈥檚 doing is blaming everyone else.聽
鈥淭his is a Chancellor who鈥檚 back against the wall. She doesn鈥檛 know what she鈥檚 doing.鈥�
Conservative Shadow Chancellor Sir Mel Stride wrote on X: “The Chancellor claims she fixed the public finances last year. If that was true, she would not be rolling the pitch for more tax rises and broken promises.聽
鈥淭he reality is, she fiddled the fiscal rules so she could borrow hundreds of billions more.
“Every time the numbers don’t add up, Reeves blames someone else. But this is about choices – and she made all the wrong ones. If Rachel Reeves had the backbone to get control of government spending – including the welfare bill – she wouldn’t need to raise taxes.”
Reeves said the Tories’ plan for 拢47bn in cuts would have “devastating consequences for our public services”.