ROME, Sept 17 (Askume) – British Prime Minister Keir Starmer said the British government’s first budget next month would not introduce measures that would undermine its ambitions to boost growth, but he warned that underfunded spending commitments could harm the economy.
Starmer, who was elected in July, said he had left a bad legacy with the previous Conservative government, and new finance minister Rachel Reeves warned she could raise taxes because she has a £22 billion ($29 billion) public finance black hole.
Before the Budget, Starmer said addressing the black hole was essential to create the stability needed for growth, but not all decisions would be contrary to growth goals.
“If it promotes growth, it’s in the yes column; if it hinders growth, it’s in the no column,” Starmer told reporters during a visit to Italy on Monday.
“And because I believe stability is vitally important to economic growth — and I don’t think we can have economic growth if we destabilize the economy — we’re going to take very drastic steps now.”
According to budget forecasts, Labor has promised to introduce a fiscal rule under which day-to-day costs would be covered by revenue and debt should be reduced as a share of the economy within five years.
Asked if he would change fiscal rules to boost growth amid concerns by some economists about low investment in the economy, Starmer said it was a budget issue but strong fiscal rules were important.
“I have always believed it is important to borrow money to invest,” Starmer said, though he warned he did not want a repeat of the underfunded budget measures that triggered the crisis and forced Conservative Prime Minister Liz Truss to resign in 2022. “I would never make the same mistake.”
“Financing spending commitments is just as bad as financing tax cuts and is likely to have the same impact on the economy.”
($1 = 0.7573 British pounds)
