FCA urges Treasury probe over Budget briefing

Saturday 29 November 2025 13.45

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The Financial Conduct Authority has been urged to resolve the dispute between the Treasury and the Office for Budget Responsibility and investigate the government’s briefing on a so-called £20 billion fiscal hole.

Scottish National Party leader Stephen Flynn urged the City regulator to investigate Reeves and other Downing Street officials over “deliberately false and misleading” briefings on public finances.

In his letter to the agency, Flynn stated that government officials had engaged in “market manipulation” by telling the media that there were holes in public finances.

His letter comes as the Office for Budget Responsibility (OBR) revealed that there was no shortage of public finances at a time when Reeves’ November 4 press conference strongly signaled that income tax rates would be raised as costly productivity downgrades had forced him to increase revenue.

Using unnamed Treasury sources, several media reports suggested there was a £20 billion fiscal hole that Reeves needed to fill.

Several reports suggested income taxes would be raised until the Financial Times published a story saying the plan was scrapped a week and a half after the press conference.

But OBR chairman Richard Hughes revealed there was no shortfall in public finances. On October 31, Reeves is set to meet its fiscal regulations of £4.2 billion.

Budget briefing ‘impacts on Bank of England’

Flynn’s letter adds to concerns that Downing Street officials are misleading the public after Tory leader Kemi Badenoch accused the Chancellor of lying.

Referring to his ‘scene setter’ speech at the start of November, Flynn said: “The Chancellor’s intervention, along with his guidance on the need to fill a non-existent £20 billion Treasury black hole, had a significant impact on financial markets, business investment decisions, foreign exchange rates and was likely to influence the Bank of England’s decision-making around interest rates made two days after his speech.”

He called for “an immediate investigation into allegations of false and highly misleading Budget briefings emanating from the UK Treasury led by Chancellor Rachel Reeves”.

A Number 10 spokesman dismissed suggestions that Reeves was misleading the public, saying he was highlighting “the challenges facing the country”.

There were mixed responses to the Budget’s efforts to improve public finances from leading economists.

Although the Institute for Fiscal Studies (IFS) said there was little “fiscal repair work” to be done as the wiggle room had not been eliminated, it warned that the tax increases imposed were a “fiscal fiction”.

The Foundation resolution said fiscal “repair work” had been delayed because left-leaning think tanks declared the budget policy “deceptive.”

City economists have largely welcomed Reeves’ extra £22 billion in funding although some, including economists at Schroders, have warned that further tax rises could come amid the UK’s economic woes.