Chancellor Rachel Reeves has pointed to investment announcements from major financial institutions as proof that her budget will stimulate economic growth, despite criticism that the fiscal plan lacks sufficient growth-boosting measures. She specifically cited commitments from JP Morgan and Goldman Sachs, with the latter announcing an expansion of its Birmingham presence following the budget announcement.
The chancellor’s growth credentials have faced scrutiny after the Office for Budget Responsibility declined to score several potential growth-generating policies, including trade deals with the United States, European Union, and India, as well as the government’s planning and infrastructure bill. The OBR stated that none of these policies individually met its 0.1% threshold for inclusion in formal economic projections, a decision that reportedly frustrated Reeves during discussions with MPs.
However, Reeves expressed confidence in exceeding official forecasts, noting that the OBR had already revised its growth projection for the current year from 1% to 1.5%. She told Times Radio that she would “defy those forecasts next year and the year after that,” suggesting her budget’s full impact on growth would become apparent over time rather than in immediate projections.
Questions have been raised about the timing and nature of the banking sector’s positive responses to the budget, particularly after reports that the Treasury had asked banks to publicly praise the fiscal plan. This came after Reeves decided not to raise taxes on the financial services industry, a decision that some critics suggest may have influenced the supportive statements from major institutions.
The chancellor defended her overall approach as balanced, combining necessary tax increases with strategic investments and regulatory reforms designed to unlock private sector growth. She argued that protecting public services while creating conditions for business investment represents the most sustainable path to improving living standards for working families across the country.