UK finance minister Reeves promises economic 'reset' in upcoming budget

Washington: British finance minister Rachel Reeves said she would be presenting her upcoming budget as a chance to reset the country's economy and boost investment when she meets international partners in Washington on Thursday.

Reeves is on a two-day trip to the International Monetary Fund and World Bank annual meetings, less than a week before she presents the Labour Party's first budget after 14 years out of power.

Government sources said last week she would be aiming to raise around 40 billion pounds ($52 billion) through a mix of tax rises and limited savings in public spending to boost public services and fill a budget hole left by the previous administration. Britain's Guardian newspaper reported on Wednesday that Reeves would also use the IMF meetings to tee up a change to the fiscal rules which constrain government borrowing. Asked about the report, a Treasury spokesperson said the ministry did not comment on budget speculation.

"I'll be in Washington to tell the world that our upcoming Budget will be a reset for our economy as we invest in the foundations of future growth," Reeves said in a statement released to mark the start of her trip.

"It's from this solid base that we will be able to best represent British interests and show leadership on the major issues like the conflicts in the Middle East and Ukraine." Earlier this week Britain said it would lend Ukraine $3 billion to buy weapons as part of a wider loan by the Group of Seven rich nations, backed by frozen Russian central bank assets.

Britain's finance ministry said Reeves would support proposals in Washington to expand development financing for poorer countries to meet the United Nations' sustainable development goals and encourage generally richer G20 countries to be more transparent about their own debt. On Tuesday the IMF upgraded its 2024 growth forecast for Britain more than for any other G7 country, although at 1.1% for 2024 and 1.5% for 2025 its forecasts remain modest by historic standards. The global lender also said Britain, like most other G7 countries, needed to stem a rise in public debt.

Reeves has been eyeing changes to Britain's domestic budget rules to make it easier to finance public investment, potentially by using a looser definition of public debt that allows a wider range of public assets to be offset against borrowing.

The Guardian said Reeves planned to target a measure known as public sector net financial liabilities - which allows illiquid financial assets to count against debt - rather than the existing target of public sector net debt, excluding the Bank of England. Britain's Institute for Fiscal Studies think tank previously estimated that such a change would potentially allow an extra 50 billion pounds of borrowing.