Chancellor Rachel Reeves has refused to rule out the possibility of setting a full budget in March, sparking speculation about possible tax rises or spending cuts.
When Reeves was pressed in Parliament, she instead reiterated her commitment to borrowing rules set out in October, which include balancing day-to-day spending with tax revenues and reducing debt as a proportion of GDP over the forecast period.
Despite pledging to hold just one Budget a year to provide businesses with predictability, the Chancellor pledged to go “further and faster” amid recent market turmoil. It attributed the sharp rise in borrowing costs to “global movements in international markets” and insisted it would continue to adhere to the government’s fiscal rules.
Her comments came after a politically charged week, during which the pound fell and British bond yields rose – developments that critics partly blamed on Ms Reeves’ trip to China. Speculation about her position mounted on Monday after Sir Keir Starmer refused to guarantee she would remain chancellor until the next general election, although Downing Street later reiterated its confidence in her leadership.
Meanwhile, the recent sale of 30-year inflation-linked bonds saw a slight drop in demand compared to a similar auction last year. Lower demand tends to push bond yields higher, which could add more pressure on the Chancellor’s fiscal room to manoeuvre.
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