News
UK finance chief Reeves promises more ‘pro-business’ government
Chancellor Rachel Reeves delivers a speech at the Treasury on July 8, 2024 in London, England.
Pool | Getty Images News | Getty Images
“This will be the most pro-growth, pro-business Treasury this country has ever seen,” Reeves, who is chancellor of the Exchequer, told CNBC’s Steve Sedgwick in a remote interview.
“I will work with businesses to ensure we are doing everything we can to generate wealth and attract business investment into the UK economy,” he added.
Reeves, who has been in the role for three weeks following Labour’s landslide victory in the UK general election on July 4, spoke from Rio de Janeiro where he is attending a meeting of G20 finance ministers.
The Chancellor said she had already met with business leaders interested in doing business in the UK. She acknowledged, however, that companies needed more clarity on taxation.
On Monday, Reeves will present the results of a Treasury audit, which is expected to reveal a £20 billion ($25.7 billion) black hole in the public finances.
The announcement could pave the way for an autumn budget with tax hikes, the first major fiscal event of the new government. The date of the financial plan will also be announced on Monday.
Reeves declined to comment on the precise details, saying that “tax-related issues are pertinent to the budget”. But she added that she wanted to ensure Britain had a “competitive tax system”.
“I want taxes to be as low as possible, but unlike the previous government, I will not make promises I cannot keep, and without being able to say where the money will come from. The number one mission of this new government is to grow the economy, and to grow the economy we need to attract wealth creators to Britain,” she said.
“We can’t tax and spend our way to greater growth and greater prosperity. We need to attract business investment to be able to do that.”
Reeves has previously ruled out increases in income tax, national insurance, VAT or corporation tax – the government’s main sources of revenue. However, the chancellor has a delicate balance to walk, given her party’s pledges to also boost national investment and public sector wages.
Prime Minister Keir Starmer has indicated on Wednesday that there would be tough fiscal decisions ahead, telling Parliament that his government faces “a more severe crisis than we thought” when looking back at the past 14 years of Conservative rule.
O center-left leader has promised to take a tough line on public spending until the country’s finances are in order. On Tuesday, he suspended seven party members who voted against him on a proposal to end the spending cap on two-child benefits.
The Labour Party’s promise to return the country to economic growth was again reiterated as a “fundamental mission” in the King’s Speech last week as the country tried to emerge from the cost of living crisis.
Among the economic measures previously announced by the government are the nationalization of railway operators and the creation of a public clean energy company, as well as more investment in public services and the creation of new housing.
The G20 meeting marks an early departure for the new Chancellor of the Exchequer, who has heralded the opportunity to “reset” some of Britain’s relationships with its international peers.
The comments echo similar remarks made by Starmer at the European Political Community summit last weekas he seeks to distance his government from the former UK leadership.
Watch CNBC’s full interview with Rachel Reeves on Monday, July 29.