UK's Reeves promises 'guardrails' around extra borrowing in budget
Adds comments from Reeves and background
By William Schomberg
LONDON, Oct 5 (Reuters) -British finance minister Rachel Reeves said she will introduce "guardrails" to ensure that extra borrowing for investment in her first budget is not excessive as she seeks to reassure investors about an expected rise in public debt.
"It's about making prudent, sensible investments in the long term and we need guardrails around that", Reeves told the Financial Times in an interview published late on Friday.
Reeves is due to make her first tax-and-spending budget statement on Oct. 30, a milestone for the new Labour government of Prime Minister Keir Starmer who has promised to increase investment in areas such as infrastructure and the transition to a net-zero economy to speed up Britain's economic growth.
With public debt at around 100% of annual economic output, investors are waiting to see how much more borrowing Reeves opts for alongside some tax increases.
British gilt yields have risen more than those of other government bonds in recent weeks in part due to concerns about the scale of extra debt sales. At the same time, the warnings about a tough budget have dented consumer confidence, casting a shadow over the first months of the new government.
Reeves and Starmer are mindful of how Britain's bond market was hit in 2022 by the plans for big, unfunded tax cuts of former Prime Minister Liz Truss which forced her to quit.
Reeves said the Office for Budget Responsibility, which makes the forecasts that underpin the government's spending and tax plans, and the National Audit Office, a spending watchdog, would scrutinise her plans for public investment which would incentivise private investment too.
"We will make sure that investment genuinely boosts growth and we will look at the role of institutions to demonstrate that, including, for instance, the NAO as well as the OBR,” she told the FT.
Reeves said she hoped the implications of higher public investment over a longer period than the OBR's five-year forecasting period would be taken into account.
The former Bank of England economist confirmed she planned to revise the government's fiscal debt rule to "take account of the benefits of investment, not just the costs," but declined to say how much extra spending those changes would allow.
She also said higher taxes were needed to avoid cuts to already stretched public finances that were implied by the plans of the previous Conservative government.
"There won't be a return to austerity," she said. "The idea of this budget is to wipe the slate clean and make an honest assessment of spending pressures and tax as well," Reeves said. "The previous government was relying on a fiction. The budget is an opportunity to bring honesty to the public finances."
Reporting by William Schomberg in London and Jahnavi Nidumolu in Bengaluru
Editing by Chris Reese and Louise Heavens
Berita Terbaru
Pengungkapan: Entitas XM Group menyediakan layanan khusus eksekusi dan akses ke Fasilitas Trading Online kami, yang memungkinkan Anda untuk melihat dan/atau menggunakan konten yang tersedia pada atau melalui situs, yang tidak untuk mengubah atau memperluas, serta tidak mengubah atau memperluas hal tersebut. Akses dan penggunaan ini selalu sesuai dengan: (i) Syarat dan Ketentuan; (ii) Peringatan Risiko; dan (iii) Pengungkapan Penuh. Oleh karena itu, konten disediakan hanya sebagai informasi umum. Anda juga harus ketahui bahwa konten Fasilitas Trading Online kami bukan sebagai ajakan atau tawaran untuk untuk melakukan transaksi apa pun di pasar finansial. Trading di pasar finansial mana pun melibatkan tingkat risiko yang signifikan pada modal Anda.
Semua materi yang diterbitkan di Fasilitas Trading Online kami hanya untuk tujuan edukasi/informasi dan tidak boleh mengandung nasihat dan rekomendasi finansial, pajak investasi atau trading, catatan harga trading kami, penawaran, permintaan, transaksi dalam instrumen finansial apa pun atau promo finansial untuk Anda yang tidak diminta.
Konten pihak ketiga apa pun, serta konten yang disiapkan oleh XM, seperti opini, berita, riset, analisis, harga, informasi lain atau link ke situs pihak ketiga yang tersedia "sebagaimana adanya", sebagai komentar pasar umum dan bukan menjadi nasihat investasi. Sejauh konten apa pun ditafsirkan sebagai penelitian investasi, Anda harus memperhatikan dan menerima bahwa konten tersebut tidak dimaksudkan dan belum disiapkan sesuai dengan persyaratan hukum yang dirancang untuk mempromosikan kemandirian riset investasi dan dengan demikian akan dianggap sebagai komunikasi pemasaran di bawah hukum dan peraturan yang relevan. Mohon dipastikan bahwa Anda telah membaca dan memahami Notifikasi pada Riset Investasi Non-Independen dan Peringatan Risiko kami mengenai informasi di atas, yang dapat diakses disini.
