Chancellor Rachel Reeves could face a staggering £30 billion fiscal shortfall if her economic plans were based on the latest City forecasts rather than the UK’s official growth projections, according to Bloomberg calculations.
The Labour government’s fiscal outlook relies on projections from the Office for Budget Responsibility (OBR), which have historically overestimated GDP growth. These forecasts remain more optimistic than those of many private-sector economists.
In a bid to bolster economic growth, Reeves convened the first in a series of planned meetings on Thursday, urging key regulators to “tear down regulatory barriers.”
Among those in attendance were leaders from the Competition and Markets Authority, as well as regulators for the communications, water, and energy sectors—Ofcom, Ofwat, and Ofgem.
Speaking to the BBC on Friday, Reeves said, “We are not going to be able to grow the economy if the regulators keep doing what they’re doing,” adding that she would encourage them to “do what is needed.”
The Chancellor’s efforts come amidst market volatility that has raised doubts about her economic strategy and her leadership.
Although market pressure has eased recently, with UK borrowing costs falling from a 17-year high, the economy suffered another blow on Friday as retail sales unexpectedly dropped during the crucial Christmas trading period.
Reeves faces the daunting task of persuading investors she is taking decisive action to improve Britain’s economic performance.
This challenge is compounded by declining consumer confidence and business sentiment since last year’s general election, as well as the impact of a significant payroll tax increase introduced in her October budget.
