British Finance Minister Rachel Reeves on Thursday pushed back against mounting criticism that her new budget relies too heavily on tax increases to finance expanded welfare programmes. Speaking in a round of media interviews, Reeves insisted that the government’s fiscal plan was designed to stabilise the economy, rebuild public services and lift household living standards – rather than simply raising taxes for the sake of spending.
Ms Reeves said she planned to bring in more legislation over the next few months that would promote investment and ensure long-term economic growth.
“There’s plenty more that I’m going to do to grow our economy and make working people better off,” she told Times Radio, in an interview that suggested further pro-growth initiatives could be announced before the end of the year.
Budget Balancing: Higher Welfare Spending Meets Revenue Pressures
Wednesday’s budget contained a slew of major tax increases, a move Reeves said was needed to reassure international bond investors that the UK is still committed to responsible borrowing and debt reduction. Maintaining investor confidence has become a central task for the Labour administration, which entered office promising both fiscal rectitude and far-reaching public sector reforms.
Among the headline policy changes was the removal of the two-child cap on welfare benefits, a long-criticized rule that limited financial support for larger low-income families. Labour lawmakers have pushed for the reversal for years, framing it as key to reducing child poverty and restoring fairness to the social safety net.
Economists said the decision represented one of the budget’s biggest spending commitments. While the welfare expansion begins almost immediately, analysts pointed out that many of the accompanying tax increases would not take full effect until later in the decade, raising questions about whether the government would face short-term financial pressure.
Economic Outlook and Investor Reaction
Initial market reaction to Reeves’ budget has been mixed. Some analysts praised the government for providing what they see as a credible path toward medium-term fiscal stability. Others expressed concerns about the timing of the tax increases and whether they could dampen business confidence at a moment when the UK economy is still recovering from years of stagnant productivity growth.
Reeves, however, said her focus remains “restoring economic security” and creating the necessary conditions for sustained investment. She has continuously made the argument that Britain can only achieve the infrastructure, skills programs, and innovation funding needed for long-term growth on the back of stable public finances.
Support for Budget Watchdog Chief Amid Leak Controversy
In an interview with Sky News, Reeves also reiterated her backing for Richard Hughes, head of the OBR, after the independent agency prematurely released a comprehensive fiscal forecast. The accidental early publication caused a minor political storm, but Reeves rejected speculation that Hughes might face consequences.
“I continue to have full confidence in Richard Hughes,” she said, stressing that the OBR’s independent scrutiny of government finances was key.
What Comes Next
Reeves will spell out further economic plans over the next few weeks on business investment incentives, green-energy projects, and speeding up housing development — three key planks of Labour’s economic program. Her budget is one of the most consequential policy moves since Labour’s election victory, as the government tries to balance fiscal responsibility and social reform. The next few months will show whether Reeves’ approach manages to effectively rebuild growth while securing the political consensus required to deliver her longer-term vision for the UK economy.
