Rachel Reeves has defended her handling of the Budget as she fights for her political survival amid opposition claims that she “misled” the public about the state of the nation’s finances.
In a series of broadcast interviews on Sunday morning, the Chancellor insisted she “of course” did not lie when she delivered a bleak assessment of the economy in early November.
She rejected claims that she exaggerated the scale of a Budget black hole and told broadcasters that there had been a genuine “repair job” needed on the public finances. “Anyone who thinks that there was no repair job to be done on the public finances, I just don’t accept that,” she said. “We needed to build more resilience, more headroom into our economy. That’s what I did, along with that investment in the NHS and cutting bills for families.”
Before the Budget, speculation had suggested Ms Reeves was grappling with a large hole in her spending plans, partly because the Office for Budget Responsibility (OBR) was expected to downgrade productivity forecasts.
She had fuelled some of that speculation herself on 4 November, warning in a Downing Street speech that weaker productivity would mean “lower tax receipts” and “consequences for the public finances”.
Opposition politicians — including Conservative leader Kemi Badenoch — have since claimed this was “misleading”, arguing the OBR had already shown her the situation was not as bleak as she claimed.
My letter to @TheFCA calling for a full investigation into potential market abuse at HM Treasury and No.10.
— Mel Stride (@MelJStride) November 30, 2025
Confidential market sensitive information appears to have been spun, leaked and misused - and markets, businesses and families have paid the price. pic.twitter.com/TEGx9FFksm
Shadow Chancellor Mel Stride has reported the Government to the Financial Conduct Authority, calling for an investigation into alleged leaks of market-sensitive information from No 10 and the Treasury.
While the watchdog did cut productivity forecasts, costing £16 billion in expected tax receipts, much of this was offset by higher inflation and wage growth, leaving Ms Reeves with a £4.2 billion surplus under her borrowing rules.
On Sunday she stressed that this would have been the smallest headroom any chancellor had secured, and it did not account for later decisions such as reversing winter fuel payment cuts, welfare reform, or scrapping the two-child benefit cap — a policy expected to lift 450,000 children out of poverty.
“If I was on this programme today and I said I’ve got a £4.2 billion surplus, you would have said, and rightly so, ‘that is not enough, Chancellor’,” she told Sky News’s Sunday Morning With Trevor Phillips.
She added: “In the context of a downgrade in our productivity, which cost £16 billion, I needed to increase taxes, and I was honest and frank about that in the speech that I gave at beginning of November.”
Ms Reeves also noted that without the productivity hit she would have had £20 billion of headroom, before factoring in welfare spending.
The Conservatives and the SNP have written to the Financial Conduct Authority calling for an investigation into Budget-related leaks and the Chancellor’s comments.
Speaking to the BBC’s Sunday With Laura Kuenssberg, Ms Badenoch said Ms Reeves should resign, claiming: “The Chancellor called an emergency press conference telling everyone about how terrible the state of the finances were and now we have seen that the OBR had told her the complete opposite.
“She was raising taxes to pay for welfare.
“The only thing that was unfunded was the welfare payments which she has made and she’s doing it on the backs of a lot of people out there who are working very hard and getting poorer.
“And because of that, I believe she should resign.”
Ms Reeves also defended scrapping the two-child benefit cap, saying the Government was “choosing children”.
She said: “The people I was thinking about were kids who I know in my constituency go to school hungry and go to bed in cold and damp homes, and from April next year those parents will have a bit more support to help their kids.”
Sir Keir Starmer is expected to defend the Chancellor and the Budget in a Monday speech outlining his long-term growth plans. He is set to say that “economic growth is beating the forecasts” but the Government must go “further and faster” to sustain it.
