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Chancellor Reeves to Adjust Debt Rules, Free £50bn for Investment in Economic 'Reset'

Oct 24, 2024, 01:18 PM

UK Chancellor Rachel Reeves has confirmed plans to change the government's fiscal rules in next week's Budget to allow increased borrowing for investment, freeing up to £50 billion for infrastructure projects. Speaking at the International Monetary Fund meetings in Washington, Reeves announced that she will be changing how debt is measured, shifting to targeting public sector net financial liabilities. She emphasized that the changes are aimed at reversing the 'rapid decline' in public investment and delivering an economic 'reset' for the UK. Reeves assured that day-to-day spending will still be matched by revenues, maintaining a 'balanced current budget rule,' and that debt will still fall as a share of GDP over the Parliament's lifetime. She stated that the additional borrowing would not be used for tax giveaways or day-to-day spending but to fund crucial investments to stimulate economic growth. Critics, including former Chancellor Jeremy Hunt, warned that increased borrowing could "punish families," but Reeves defended her position, saying, "I will be a responsible Chancellor." The announcement comes ahead of the Budget and is designed to give markets time to adjust to the forthcoming fiscal changes.