Labour’s first budget, set to be unveiled next week by Chancellor Rachel Reeves, has been subject to extensive pre-announcement coverage to avoid spooking the markets with surprises. One key measure expected in the budget is a change in the official definition of debt used in the government’s fiscal rules. Reeves is likely to switch to the public sector net financial liabilities (PSNFL) measure, which includes all government financial assets and liabilities, potentially allowing for increased borrowing for long-term infrastructure investment.
The proposal to change the definition of debt has raised concerns about investor confidence, with questions about whether it might spook investors. However, Keir Starmer, attending the Commonwealth heads of government meeting, defended the plan, emphasizing a desire to see more investment in the economy and assuring that the budget would be “unashamedly pro-business.” Starmer highlighted that investors have responded positively to the government’s plans and reiterated that growth is a top priority.
Meanwhile, amidst other government events, Cabinet Office minister Pat McFadden is scheduled to take questions in the Commons, Downing Street will hold a lobby briefing, and Deputy PM Angela Rayner will give a speech to the Local Government Association. Rachel Reeves will be in New York for the annual IMF meeting. Additionally, a football governance bill is being introduced in the House of Lords.
Overall, the upcoming budget announcement is anticipated to be significant and provide insight into how the government intends to conduct business, with a focus on boosting growth and investment in the economy.
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