British Finance Minister Rachel Reeves has promised to make “necessary”, “urgent” and “very difficult” choices to restore the country’s economic stability.
Pool | Getty Images News | Getty Images
British Finance Minister Rachel Reeves on Thursday confirmed that she intends to change the country’s fiscal rules in the October budget, a measure designed to release billions of pounds for investment.
It brings to an end weeks of speculation ahead of the Labor government’s highly anticipated debut budget, which Reeves is scheduled to deliver on October 30.
Prime Minister Keir Starmer previously warned the budget was “going to hurt” and the government would have to “ask big questions” from the public to tackle what he called a “black hole” in public finances.
Writing in the Financial Times on Thursday, Reeves said the “investment rule” would “get debt down as a proportion of our economy.”
He added that this change “will create space to increase investment in the fabric of our economy, and ensure that we do not see the fall in public sector investment that was planned in the last government.”
Reeves did not specify exactly what investment rules will change, but it has been reported that the Treasury may target public sector net financial liabilities (PSNFL) in the size of UK debt, rather than public sector net debt.
The PSNFL measure takes into account more of the government’s balance sheet, including financial assets and liabilities, than the public sector’s net debt.
A Treasury spokesman declined to comment when asked whether changes to fiscal rules would target the PSNFL on the UK’s debt scale.
The Institute for Fiscal Studies, an influential think tank, said on September 30 that changes to the fiscal rules to target the PSNFL would give the government up to £50 billion ($64.8 billion) of additional headroom.
Reeves confirmed the changes to Britain’s fiscal rules during a trip to the International Monetary Fund’s annual meeting in Washington.
