Starmer Defends Chancellor Reeves After Claims She Misled Public on Finances

British Prime Minister Keir Starmer on Monday publicly defended Chancellor of the Exchequer Rachel Reeves after opposition politicians accused her of misleading the public and markets about the state of the public finances ahead of last week’s budget.

Starmer said there had been "no misleading" in the run-up to the budget, which includes roughly £26 billion in tax measures the government says are needed to reduce borrowing, invest in infrastructure and public services, ease cost-of-living pressures and encourage economic growth.

Three weeks before the budget, Reeves gave a speech preparing markets and voters for the possibility of higher income tax rates - a move that appeared to contradict the government's election pledge not to raise income tax for working people. After a backlash from some Labour MPs and a stronger-than-expected fiscal update from the independent Office for Budget Responsibility (OBR), Reeves narrowed the measures and adopted smaller revenue-raising steps.

Opposition parties contend Reeves must have known at the time of her speech that an updated OBR forecast showed a smaller shortfall, and that her warnings were therefore misleading. The Conservatives and the Scottish National Party have asked the Financial Conduct Authority to assess whether her comments or alleged pre-budget leaks warranted investigation, and Reform UK leader Nigel Farage has urged the government's standards adviser to examine her conduct.

Reeves has rejected any suggestion she misled the public or markets. She said the OBR had judged before the budget that tax receipts would be about £16 billion lower than earlier projected because of a downgraded productivity forecast, and that she correctly told audiences the downgrade "has had a big impact on the public finances. And that was why I would need to ask people to contribute more." Critics have interpreted subsequent figures and the scaled-back measures as evidence of inconsistency.

Starmer defended the budget choices in a speech at a community centre in London, saying his administration inherited "public finances and public services in total crisis" after 14 years of Conservative government. He said the government must both strengthen the public finances and invest in services, and pointed to measures to raise the minimum wage and support children in poverty.

"We confronted reality, we took control of our future and Britain is now back on track," Starmer said, adding that the government would press ahead with efforts to reduce the welfare bill and to pursue a closer relationship with the European Union.

Both initiatives carry political risk: welfare reform could unsettle parts of Labour's base, while moving closer to the EU is likely to provoke opposition from pro-Brexit parties. Starmer argued the post-2020 exit deal had "significantly hurt our economy" and that closer ties with the EU would help restore growth.

The controversy centers on timing and transparency: whether Reeves knowingly presented a bleaker picture of the finances than the OBR forecast justified, or whether her statements accurately reflected the information available to her at the time. The FCA and other bodies may determine whether any formal inquiry is warranted; for now, the government maintains that its decisions were responsible responses to inherited fiscal problems.