Posted By Global Banking and Finance Review
Posted on January 23, 2025
By Alexander Smith
DAVOS, Switzerland (Reuters) - British finance minister Rachel Reeves told Reuters on Thursday that she will announce new budget measures if necessary in March to meet her fiscal rules, but added that it was important not to "jump the gun" with two months still to go.
"We've asked the independent Office of Budget Responsibility to do a forecast that will be published on March 26 and at that point, I'll be setting out any changes that are necessary," Reeves said in an interview on the sidelines of the World Economic Forum's annual meeting in Davos, Switzerland.
"I don't think we should jump the gun. (There's) another two months before the OBR produce their forecast."
Earlier this month, a sharp sell-off in British government bonds, driven to a large degree by shifts in U.S. interest rate expectations ahead of the presidential inauguration of Donald Trump, forced Reeves to say she would act to meet her fiscal rules if needed.
Market borrowing costs have fallen back in the last week and as of Thursday, British gilts were the third best-performing bonds among the Group of Seven countries this year.
"Just looking at what's happened year to date, we're in line with our peers to just look at bond yields," Reeves said.
On the spike in yields earlier in the month, Reeves said: "It's not a UK phenomenon. It's not a targeting of the UK."
Since her Oct. 30 budget that raised borrowing and increased tax on employers to help restore public services and investment, economic data has largely turned against Reeves, adding to the likelihood that she will need to do more to meet her rules.
These include balancing day-to-day spending with revenues by the end of the decade and for public sector net financial liabilities to fall as a proportion of gross domestic product.
"We are taking out those barriers that have stopped businesses investing and growing in Britain," Reeves said. "I am confident that we can get those growth numbers up."
(Reporting by Alexander Smith, writing by Andy Bruce; Editing by William Schomberg)
