Conservatives: Response to Rachel Reeves spooking the markets with fiscal rule changes

Gareth Davies MP, Shadow Exchequer Secretary, said:

“Before the election Rachel Reeves promised that she would not 'fiddle' the fiscal rules, and now it seems she is going to do exactly that. Remarkably she is announcing this not to Parliament, but to the IMF in advance of the Budget.

“This is already having real world effects, with borrowing costs rising. This uncertainty over additional borrowing risks interest rates staying higher and for longer. It's families up and down the country who would pay the price.”

ENDS

Notes to Editors

• Rachel Reeves is reportedly going to change the fiscal rules to allow for increased borrowing. Reeves is expected to move to the Public Sector Net Financial Liabilities (PSNFL) debt measure model that could allow for more borrowing (Guardian, 24 October 2024, link)

o    Rachel Reeves previously said she was “not going to try to fiddle the figures or make something different to get better results. We will use the same models the government uses'” (Bloomberg, 13^th November 2023, link)

• Borrowing costs have already risen in response to these reports. The 10 year gilt yield rose by around 6 points to above 4.2% on Thursday morning (Guardian, 24 October 2024, link)