Chancellor Rachel Reeves has dismissed warnings that the government faces a £50bn shortfall in its finances, pushing back against reports that she will be forced into big tax rises or spending
cuts in her first Budget this November.
In an interview with the BBC, Reeves brushed off the speculation, saying bluntly: “A lot of them are talking rubbish.”
Her comments come as the cost of government borrowing has risen to its highest level in nearly three decades, sparking concerns about how the Treasury will balance the books. The Budget is set for 26 November.
Reeves insisted she would “get the balance right,” promising that both workers and businesses could be confident she would deliver growth and investment.
But the Conservatives hit back, accusing Labour of lacking a plan. Shadow chancellor Mel Stride claimed ministers were “stalling” in the hope that the numbers would improve.
The £50bn question
Last month, the National Institute of Economic and Social Research (NIESR) suggested Reeves may need to find as much as £50bn to meet her own fiscal rules. But Reeves played down the figure, saying the think tank had “more than most got their numbers wrong in the last few years.”
Other forecasts suggest the gap could be closer to £25bn.
Reeves has committed to two key rules on government borrowing:
- Everyday spending must be covered by tax revenues, not borrowing, by 2029-30.
- Public debt must be falling as a share of national income by the end of this parliament.
Before the election, Labour pledged not to raise VAT, income tax or National Insurance for working people. But Reeves did raise employer NI contributions at the last Budget, a move that angered some businesses.
Speculation has since swirled about possible tax hikes on banks, property, or the wealthy — but Reeves pushed back firmly: “People who claim to know what’s in the Budget before decisions are made are just wrong… and frankly, irresponsible.”
Balancing act
Reeves said her focus was on ensuring there’s enough funding for public services, especially the NHS, while also keeping the UK attractive for investment.
She denied that higher borrowing costs undermined her credibility, pointing out that similar trends were being seen in the US and Europe. “There are global pressures on borrowing costs,” she said.
Some commentators have even warned the UK could need an IMF bailout, but Reeves dismissed the idea: “Serious economists don’t accept that.”
Welfare and next steps
On welfare, Reeves said the system “should always be there for people who really need it” but stressed the importance of helping more people into work.
A review of disability benefits is expected soon, led by Work and Pensions Minister Stephen Timms. At the same time, some Labour MPs are pressing for the government to reverse the two-child benefit cap as part of its anti-poverty efforts.
Despite the challenges, Reeves said there were “lots of positive signs” in the economy, but admitted more work was needed so that growth is felt by ordinary working families. Photo by Lauren Hurley / No 10 Downing Street, Wikimedia commons,
