As the Office for Budget Responsibility warns of minimal long-term growth impact from the latest budget, Keir Starmer insists further pro-growth measures are on the horizon

In a recent statement, Prime Minister Keir Starmer has addressed the Office for Budget Responsibility’s (OBR) caution regarding the government’s budgetary measures, asserting that the policies outlined by Chancellor Rachel Reeves are just the initial steps towards fostering economic growth. The OBR has indicated that while the budget may offer a short-term boost, it is unlikely to significantly impact growth over the next five years.

In a BBC interview, Starmer maintained a positive outlook, stating, “I want to do better than that,” emphasising that further pro-growth initiatives, including planning reforms and deregulation, would be introduced to stimulate the economy. This response comes as UK government borrowing costs have surged to their highest levels this year, with financial markets reacting to concerns that the budget could lead to a more cautious approach from the Bank of England regarding interest rates.

The budget, which includes £40 billion in tax increases aimed at bolstering public services, has faced scrutiny from various quarters. The Institute for Fiscal Studies (IFS) has warned that Reeves may need to implement an additional £9 billion in tax hikes to prevent further austerity measures affecting struggling public services.

Meanwhile, the Liberal Democrats have called for the social care sector to be exempt from the national insurance hike, highlighting the challenges that the increase poses to already strained services. Ed Davey, leader of the Liberal Democrats, argued that the care sector is on the brink of crisis and should not bear the burden of this financial strain.

In a related development, the International Monetary Fund (IMF) has voiced support for Reeves’s budget plan, suggesting that the proposed tax rises could lead to sustainable growth. This endorsement adds a layer of credibility to the Labour government’s financial strategy, despite the looming doubts expressed by the OBR and the IFS.

The debate around the budget continues, with significant attention focused on how these policies will affect households and the broader economic landscape. Starmer’s commitment to addressing the criticisms raised by the OBR indicates a proactive approach as the Labour government navigates the complexities of economic recovery and public service funding.

As political dynamics shift, the government’s ability to translate its budgetary measures into tangible growth will be critical in shaping public perception and achieving its long-term economic goals.