UK’s Reeves announces budget plans to parliament

British finance minister Rachel Reeves announced her budget plans to parliament on Wednesday, seeking to shore up public services and plug a funding gap, without damaging a promise to promote growth and investment.

Below are quotes on the key issues:

REEVES ON INFLATION FORECASTS

“The cost of living crisis under the last government stretched household finances to their limit, with inflation hitting a peak above 11 per cent. Today, the OBR (Office for Budget Responsibility) say CPI inflation will average 2.5 per cent this year, 2.6 per cent in 2025, then 2.3 per cent in 2026, 2.1 per cent in 2027, 2.1 per cent in 2028 and 2.0 per cent in 2029.”

REEVES ON GROWTH FORECASTS

“The OBR forecast that real GDP growth will be 1.1 per cent in 2024, 2.0 per cent in 2025, 1.8 per cent in 2026, 1.5 per cent in 2027, 1.5 per cent in 2028 and 1.6 per cent in 2029. And the OBR are clear: this budget will permanently increase the supply capacity of the economy, boosting long-term growth.”

REEVES ON FISCAL RULES

“We set out the fiscal rules that would guide this government. I am confirming those today: our stability rule and our investment rule. The ‘stability rule’ means we will bring the current budget into balance so that we do not borrow to fund day to day spending. We will meet this rule in 2029-30, until that becomes the third year of the forecast.”

REEVES ON BALANCING BUDGET

“We will balance the current budget in the third year at every budget, held annually each autumn. That will provide a tougher constraint on day-day-spending so difficult decisions cannot be constantly delayed or deferred.

“The OBR say that the current budget will be in deficit by £26.2bn in 2025-26 and £5.2bn in 2026-27 before moving into surplus of £10.9bn in 2027-28, £9.3bn in 2028-29 and £9.9bn in 2029-30 meeting our stability rule two years early.”

REEVES ON BORROWING

“The OBR confirms that borrowing in this financial year is now £127 bn, reflecting the inheritance left by the party opposite. The increase in the net cash requirement in 24-25 is lower than the increase in borrowing, at £22.3bn higher than the spring forecast. Because of the actions we are taking borrowing falls from 4.5 per cent of GDP this year to 2.1 per cent of GDP by the end of the forecast. Public sector net borrowing will be £105.6bn in 2025-26, £88.5bn in 2026-27, £72.2bn in 2027-28, £71.9bn in 2028-29 and £70.6bn in 2029-30.”

REEVES ON COMPENSATION TO THOSE AFFECTED BY BLOOD CONTAMINATION SCANDAL

“Today, for the very first time, we will provide specific funding to compensate those infected and those affected, in full… … with £11.8bn in this budget.

“I am also today setting aside £1.8bn to compensate victims of the Post Office Horizon scandal, redress that is long overdue for the pain and injustice that they have suffered.”

REEVES ON DRIVING GROWTH

“The only way to drive economic growth is to invest, invest, invest. There are no shortcuts. And to deliver that investment we must restore economic stability and turn the page on the last 14 years

REEVES ON INHERITED BUDGET BLACK HOLE

“The Office for Budget Responsibility have published their own review of the circumstances around the Spring Budget forecast. They say that the previous government – and I quote – ‘did not provide the OBR with all the available information to them’ and that, had they known about these ‘undisclosed spending pressures that have since come to light’ then their Spring Budget forecast for spending would have been, and I quote again: ‘materially different’.

“Let me be clear: that means any comparison between today’s forecast and the OBR’s March forecast is false because the party opposite hid the reality of their public spending plans.”