Reeves accused of ‘fiscal fandango’ amid changes to OBR forecasts

Sunday 23 November 2025 10:31

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Former Bank of England chief economist Andy Haldane accused Rachel Reeves of overseeing a “fiscal fandango” ahead of the Budget amid months of speculation around expected tax rises.

Speaking to the BBC, Haldane hit out at months of speculation surrounding the Budget which had caused “paralysis” in the UK economy.

His comments came days after he criticized “repeated mistakes” regarding budget leaks that were hampering the country’s growth.

He told the BBC on Sunday morning: “We face speculation month after month – fiscal fandango,” Haldane said.

“This is detrimental to the economy. It causes paralysis among businesses and consumers. This is the single biggest reason why growth stagnated in the second half of the year.

“Next week, we need decisive action that ends the idea of ​​further tax increases.”

Haldane’s intervention comes amid calls for the Chancellor to increase his wiggle room in the Budget to reduce the likelihood of estimates wiping out his wiggle room.

This also comes as reports suggest that Reeves was able to scrap plans to raise income taxes due to improved public finance projections by the Office of Budget Responsibility (OBR).

Responding to claims of Budget speculation hampering growth, Transport Minister Heidi Alexander said the process had seen “shifting sands” due to changes in OBR forecasts before the Budget.

“The OBR’s review of productivity forecasts shows that this whole process is really at an early stage, and we are facing a very challenging global economic environment,” Alexander said.

Reeves promises post-Budget welfare reform

Criticism of the government’s handling of the Budget process will add to the pressure on Reeves to deliver a Budget that keeps economic growth on track while maintaining political support from the entire voter base.

Writing in The Sunday Times, Chancellor Rachel Reeves said she would press ahead with welfare reforms after the Budget amid further reports that she would make a £3 billion commitment to remove the two-child benefit cap.

The Chancellor said he was determined to stop the government squandering funds, adding that “there is nothing fair or progressive about injustice and waste in government”.

The £3 billion spending commitment will be seen as a way to fend off growing opposition to Keir Starmer and Reeves in Labour, although he may face some questions over tax increases while allowing disability payments to rise by more than £20 billion over the next four years.

In a message to traders in the bond market who want greater fiscal prudence from the government, Reeves said in The Sunday Times that he would introduce welfare support to tackle youth unemployment and curb fraud in the system.

The main focus of this Budget is to lower the cost of living, which could drive interest rates down further and help lower the government’s borrowing costs.

“These choices are only possible because of the stability we have returned to the economy. With my strong commitment to fiscal rules, I will maintain financial stability and reduce debt,” he wrote in The Sunday Times.

“I will build the space I need so that this country is ready to face increasingly unstable global challenges.”

According to the paper, key tax increases in the Budget will include freezing income tax thresholds for the next two years and adding a “mansion tax” involving a surcharge on the most expensive properties.

Reeves is also expected to make national insurance payable above the salary sacrifice scheme’s new cap and introduce a pay-per-mile scheme on electric cars.