Chancellor Rachel Reeves has pledged to challenge bleak economic projections after the UK’s fiscal watchdog warned of a productivity downgrade that could leave a £20 billion shortfall in her upcoming budget. Reeves said she refuses to “simply accept the forecasts” and remains committed to proving them wrong through targeted economic reforms.
The Office for Budget Responsibility (OBR) is expected to lower its productivity outlook by 0.3 percentage points, tightening the fiscal space available for Reeves as she balances growth plans with her party’s tax promises. The chancellor is reportedly considering selective income tax changes to fill the gap, though she insists on avoiding a return to austerity.
Reeves acknowledged the economic challenges inherited from years of low productivity, Brexit disruption, and the pandemic but said the focus must remain on rebuilding a stronger economy. She pointed to five interest rate cuts, rising wages, and new investments in infrastructure as evidence that Britain can outperform expectations.
Speaking at a business summit in Riyadh, Reeves also stressed the need for fiscal resilience and hinted at renewed cooperation with the European Union to ease trade costs and inflation pressures. “We won’t talk down our country,” she said, rejecting claims of economic decline and reaffirming her commitment to fair growth and financial stability.