Chancellor Rachel Reeves addressed the nation from Downing Street this morning ahead of the upcoming Autumn Budget, warning that the Government still faces a “fiscal hole” left by its predecessors.
From inside Number 11, Reeves once again acknowledged the difficult economic inheritance she and the Prime Minister had taken on, citing what she called “long-term failure to invest in our regions” and a “rushed and ill-conceived Brexit that brought further disruption.”
She added: “Previous governments have not adequately faced up to these challenges […] all this meant when the pandemic arrived we were underprepared.”
Reeves said that while progress had been made since taking office, much work remained to be done to deliver sustainable growth.
She said: “We have begun to see the results of these plans in falling interest rates […] But I know that real growth takes time.”
Highlighting the Government’s priorities ahead of the Budget later this month, Reeves placed housing and infrastructure at the centre of her economic strategy.
She made particular note of the Government’s current focus on “reforming our economy, ripping up the planning rules, so we can build housing and infrastructure right across the country.”
Reeves continued: “The first part of our planning reforms will add an additional £6.8bn to the size of our economy in the next five years.
“But the next part, our Planning Bill, must complete its passage through Parliament before it can make a difference.”
Reeves also drew attention to the continuing pressure of high borrowing costs on households and businesses.
“Interest rates, which rose from 0.1% to 5.25% in the last Parliament, have now been cut five times, but at 4% they are still a constraint on business borrowing and a burden on family finances,” she said.
Despite these challenges, the Chancellor pointed to early signs of stability.
“Inflation is already much lower than the double digits seen under the previous government. The choices I make in this Budget, this month, will be focused on getting inflation falling and creating conditions for interest rate cuts.”
Reaffirming her fiscal stance, Reeves said her “commitment to the fiscal rules is ironclad,” adding that “it is my job to deal with the world as we find it, not the world as we may wish it to be.”
Concluding her remarks, Reeves said: “Mine will be a Budget for growth […] to build a stronger economy and get the cost of borrowing down.”
The Budget is expected to be delivered later this month, though it remains to be seen whether the Chancellor will rule out tax rises or pursue the widely speculated abolition of Stamp Duty in favour of a new property tax.
