Rachel Reeves to pitch UK as ‘beacon of stability and growth’ at IMF, amid budget pressure – business live

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Sky: Chancellor admits tax rises and spending cuts considered for budget

Rachel Reeves has told Sky News she is looking at both tax rises and spending cuts in the budget.

When asked how she would deal with the country’s economic challenges in her 26 November statement, the chancellor replied:

“Of course, we’re looking at tax and spending as well.”

Spending cuts could be politically challenging for the government, though, following the revolt over welfare cuts last summer, which is why many economists expect tax rises in the budget.

With forecasts swirling of a black hole of perhaps £20bn in the budget calculations, Reeves also insisted she would stick to her fiscal rules, saying:

“The numbers will always add up with me as chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof.”

And asked if she could promise she won’t allow the economy to get stuck in a doom loop cycle, Reeves replied: “Nobody wants that cycle to end more than I do.”

Reeves pushed to show 'credibility' on fiscal consolidation

Rachel Reeves may also face pressure to show a credible tax and spending plan in November’s budget, and measures to improve productivity, during her visit to Washington.

Yesterday, at a press conference about the outlook for global financial stability, IMF expert Antansios Vamvakidis warned:

“clearly markets are concerned about the UK economy, and we have seen more volatility in the UK compared to other advanced economies.”

Pointing to above-target inflation and weak productivity, he said:

“the market is asking for more details on the fiscal plans in the UK: so yields, as a result, are higher in the UK compared to other advanced economies.”

With Rachel Reeves currently drawing up her budget for 26 November, Vamvakidis added that the IMF recommends the government show, “credibility on the fiscal consolidation plan, and reforms to increase productivity.”

Introduction: Reeves to pitch UK as ‘beacon of stability and growth’ at IMF

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Rachel Reeves is jetting across the Atlantic to pitch the UK as a “beacon of stability” in unstable times.

The UK chancellor is due to meet with senior figures from other G7 countries, and aim to solicit foreign investment from top global firms, as she attends the Annual Meetings of the International Monetary Fund and the World Bank in Washington DC. She’ll also attend a Ukraine roundtable.

Speaking before her arrival, Reeves says:

“Our Plan for Change is delivering national renewal built on the rock of economic stability – the foundation for more security, more respect and more opportunity for every part of the UK.

“In Washington I will showcase Britain’s commitment to fiscal responsibility – while creating the conditions to boost productivity, attract investment and secure our place as a strong and credible partner in a stable global economy.”

Reeves is expected to pitch her fiscal rules as “the bedrock for growth and investment”, and also point to the government’s plans for a National Wealth Fund, and capital spending plans for infrastructure, energy, digital transformation and research.

Yesterday, the IMF raised its forecast for global growth this year, concluding that tariff shocks and financial conditions have proven more benign than expected.

It also released new forecast showing that the UK is likely to suffer the highest inflation in the G7 group of leading economies this year and next, unpalatable news for Reeves and UK consumers alike.

The IMF modestly increased its forecast for economic growth in the UK for this year, from 1.2% to 1.3%, and slightly downgraded it for 2026, also to 1.3%, amid concerns over the labour market.

Bank of England governor Andrew Bailey smeared a little grease on the ‘beacon of stability’ last night, though. He’s also attending the Annual Meetings, and raised concerns about the UK economy running “under potential” and a softening jobs market.

Bailey told an event organised by the Institute of International Finance:

“We’re seeing some softening of the labor market,”

…adding that “that broadly is the story that I pick up” as he travels around the UK.

The agenda

• 10am BST: Bank of England to issue response to the banker bonus deferral consultation

• 1.45pm BST: IMF to release its Fiscal monitor

• 2:15pm Treasury Committee hearing on AI in financial services