Reeves accused of 'lying to public to justify tax hikes'

Chancellor told before Budget that there was no deficit

- KATE DEVLIN WHITEHALL EDITOR

Rachel Reeves has been accused of misleading the public on the state of the country’s finances to justify £26bn worth of tax hikes in her Budget.

There had been dire warnings that the chancellor faced a £20bn black hole, and in an extraordinary speech on 4 November, she signalled higher taxes were likely, blaming Donald Trump's tariff war and the Budget watchdog's expected downgrade of economic productivity for the “hard choices” she would be forced to make.

But it has now emerged that Ms Reeves's comments came days after the Office for Budget Responsibility (OBR) told her the economic picture had significantly improved and that, instead of a deficit, she had a surplus of £4.2bn.

Tory leader Kemi Badenoch called for the chancellor, whose Budget was seen as make-or-break for her political future, to be sacked, saying she had “lied to the public to justify record tax hikes” and was “bribing Labour MPs to save her own skin”.

Downing Street denied Ms Reeves had misled the public and the markets. “I don't accept that,” the prime minister's official spokesperson said.

But Paul Johnson, a former head of the Institute for Fiscal Studies (IFS), said: “I think it [her 4 November press conference] probably was misleading.”

He said her words were “clearly intended” to confirm what independent forecasters such as the National Institute of Economic and Social Research (NIESR) had been saying, after it predicted Ms Reeves would have to fill a multibillion-pound black hole in the nation's finances.