LONDON (Reuters) – British Prime Minister Keir Starmer on Saturday promised reforms to speed up the economy and overhaul the public sector after the first budget of his new government failed to boost the growth outlook and sent government bond prices into a two-day dive.
Finance minister Rachel Reeves announced a plan on Wednesday that included big increases in tax, borrowing and spending, but Britain’s budget watchdog judged that economic growth beyond next year would be weaker than it previously thought.
British government bond prices fell, sending borrowing costs up sharply in the hours after her budget speech and again on Thursday before stabilising on Friday.
Writing in the Financial Times, Starmer said the budget was a “first step on our mission for growth” but also opened the way for reform of “our creaking central state” and its public services as well as more private sector investment.
Starmer listed his government’s pro-growth plans such as mandatory housing targets, reforms of the planning system reforms, quicker approval of clean energy projects and a review of how regulators operate.
“This process involves detailed, often painstaking work. For that reason, it is not yet ready to be included in the OBR’s forecast for growth,” he said, referring to the Office for Budget Responsibility whose forecasts underpin the budget.
“However, we should be optimistic about the potential,” Starmer wrote, focusing on the importance of private sector investment. “This government is determined to make the UK one of the best places to invest and do business, not just in Europe but the world.”
(Writing by William Schomberg; Editing by Angus MacSwan)
