Sir Keir Starmer gave another broad hint at looming spending cuts today as he blamed the ‘volatile’ global economy for Britain’s post-Budget woes.
Sir Keir insisted the Government will stick to its fiscal rules as he clashed with Kemi Badenoch at PMQs.
Although he refused to rule out tax rises, he also dismissed the prospect of another Budget in March – which would likely be required to ramp up revenues.
The premier also gave a robust defence of embattled Rachel Reeves, saying she would be Chancellor ‘for many, many years to come’.
The comments came as Ms Reeves was given respite by inflation coming in slightly lower than expected.
The headline CPI (Consumer Price Index) was 2.6 per cent in December, instead of sticking at 2.5 per cent as analysts had predicted. The yield on ten-year gilts – a key way the Government raises money – eased in response.
However, the volatility is still likely to wipe out Ms Reeves headroom when the OBR watchdog updates on whether she is meeting her fiscal targets in March.
Meanwhile, businesses have continued to voice alarm the tax raid from the October Budget is crushing growth.
Sir Keir Starmer gave another broad hint at looming spending cuts today as he blamed the ‘volatile’ global economy for Britain’s post-Budget woes
Sir Keir insisted the Government will stick to its fiscal rules as he clashed with Kemi Badenoch at PMQs
The yield on ten-year gilts – a key way the Government raises money – eased in response
Ms Badenoch said: ‘Just today, the British Retail Consortium says two-thirds of businesses will have to raise prices to cope with his tax hike, his Chancellor ignored all the warnings and ploughed ahead with an unprecedented borrowing spree, leaving all of us more vulnerable.
‘Now, we have businesses saying they will raise prices to cover his jobs tax, we have an energy policy that will drive up bills, and all the while, we are spending more day-to-day on debt interest than we do on schools and universities.
‘The Prime Minister refused to repeat his Chancellor’s promise that she would not come back for more, will he now rule out any new tax rises this year?’
Sir Keir replied: ‘We took the right and difficult decisions at the budget, decisions that they did not have the courage to take, which left us in the mess in the first place.
‘When it comes to tax, she knows very well the limits of what I can say from this despatch box, but we have an ironclad commitment to our fiscal rules. We can’t just tax our way up to the problems that they left us, which is why we put in place tough – they were howling at the spending decisions, they wouldn’t take them, and we’ll stick to those spending decisions and our focus is absolutely on growth.’
Earlier, Treasury Chief Secretary Darren Jones told BBC Breakfast: ‘There’s a lot happening globally and as ministers we don’t give a running commentary on the market, because we take the price in the market, we do accept the price in the market.
‘But there’s no denying that this Government inherited an economy from the Conservatives that had a high amount of debt and low growth and that’s why we have got non-negotiable fiscal rules where under this Government, day-to-day spending for public services must be met by tax receipts, not by borrowing.
‘People at home know you can’t just keep borrowing every month to pay the bills.
‘And where we do borrow to invest in the country’s infrastructure, the debt has to be falling as a size of the economy over the next five years.
‘Those fiscal rules are non-negotiable. That means there are tough decisions for the Chancellor and this Government to take.’
Mr Jones told Times Radio there will not be another Budget in the Spring.
‘We’ve been very clear there’s only going to be one major fiscal event, Treasury language for a budget, a year. We did that in the autumn last year,’ he said.
He also branded criticism of Ms Reeves ‘unfair’. ‘The Chancellor is doing a brilliant job,’ he told LBC.
He said a lot of issues in the markets are down to ‘global movements’.
‘The first thing to say, as I’m always reminded, is ministers don’t comment on market movements, but what I will say is that a lot of this is down to global movements in international markets. Other countries are facing similar challenges,’ he said.
The Chancellor’s fiscal rules are the ‘right approach from the Chancellor in difficult global economic circumstances, and with a difficult inheritance that we had from the last government’, he said.
Treasury Chief Secretary Darren Jones admitted ‘tough decisions’ will be needed after the UK took a hammering from markets
Chancellor Rachel Reeves said she would ‘fight every day’ to improve people’s living standards