Rachel Reeves has set a date of 3 March for an early spring statement, as Labour attempts to draw a line under a year of tax speculation that business leaders blamed for damaging Britain’s economy.
Announcing a date to prioritise “stability and certainty”, the Treasury said the chancellor had asked the Office for Budget Responsibility (OBR) to prepare forecasts for the economy and public finances.
Reeves has come under fire over the buildup to this year’s autumn budget after months of leaks, briefings and tax speculation contributed to a downturn in consumer spending and businesses freezing their investment plans.
Britain’s economy unexpectedly shrank in October, while the Bank of England forecasts that growth is on track to flatline in the fourth quarter. Business groups have also warned of a sharp fall in private sector activity at the turn of the year, with companies putting their spending decisions and hiring plans on hold.
Economists have blamed the budget speculation in part on the chancellor leaving limited headroom against her self-imposed fiscal rules – making her vulnerable to a deterioration in the forecasts for the public finances. The uncertainty also fuelled a sell-off in UK government bonds, driving up borrowing costs for the Treasury, businesses and households.
At the budget in November, Reeves announced she would more than double her headroom to £22bn to guard against future shocks that would risk forcing her to make fresh spending cuts or tax increases.
At the time, the chancellor also said the OBR would not make an assessment of the government’s performance against the fiscal mandate, and would instead provide an interim update on the economy and public finances.
The Treasury said the government would respond to the OBR’s March forecast with a statement to parliament, in line with a commitment to deliver one major fiscal event each year.
“This approach gives families and businesses the stability and certainty they need and supports the government’s growth mission,” it said.
Reeves has said the OBR will probably publish its spring forecasts before a replacement is appointed for Richard Hughes, who quit as the chair of the independent watchdog after its November budget documents were published online almost an hour before the chancellor’s speech.
After a series of briefings and gaffes, the Treasury and the OBR are also undertaking leak inquiries.
