Brexit to blame for cuts, says Reeves

Rachel Reeves has blamed a heavier than anticipated blow from Brexit and austerity for forcing her to take action to balance the books at next month’s budget.

- Richard Partington Heather Stewart

In her clearest attempt to draw Brexit into the framing of her imminent tax and spending decisions, the chancellor said leaving the European Union was turning out to have caused more damage than official forecasters had previously outlined.

The chancellor hinted she was braced for a sharp downgrade in growth forecasts from the Treasury’s independent watchdog, the Office for Budget Responsibility, alongside what is shaping up to be a crucial budget.

"The OBR, I think, are going to be pretty frank about this - that things like austerity, the cuts to capital spending and Brexit have had a bigger impact on our economy than was even projected back then," she said at an investment event in Birmingham. "That is why we are unashamedly rebuilding our relations with the EU to reduce some of those costs, that in my view were needlessly added to businesses since 2016 and since we formally left a few years ago."

The chancellor's intervention comes amid growing confidence within Keir Starmer's government to speak out about the damage of Brexit, as the decision to leave the EU almost a decade ago continues to weigh heavily on Britain's economic performance.

It also marks an opportunity for Labour to tackle rising support for Nigel Farage, with the prime minister recently attacking the Reform leader for "walking away" from the leave vote without a plan.