Reeves will borrow billions after big fiscal rules change

Rachel Reeves has announced a change to the fiscal rules ahead of next week’s budget, allowing her to borrow billions more each year.

- ARCHIE MITCHELL & MILLIE COOKE

The chancellor yesterday confirmed her rules will “make space for increased investment in the fabric of our economy”, amid widespread expectation she will change the way debt is measured.

She said her “investment rule” would “get debt falling as a proportion of our economy”. She wrote in the Financial Times on Thursday: “That will make space for increased investment in the fabric of our economy, and ensure we don’t see the falls in public sector investment that were planned under the last government”,

She is expected to change the measure of debt to one which includes a wider range of state assets and liabilities. Her predecessor Jeremy Hunt immediately criticised the plans, adding that the decision to change the definition of debt used in the fiscal rules will “punish families with mortgages”.

He posted on X: “The consistent advice I received from Treasury officials was always that increasing borrowing meant interest rates would be higher for longer – and punish families with mortgages. What’s even more remarkable is that the chancellor hasn’t seen fit to announce this major change to the fiscal rules to parliament. The markets are watching.”