Transport Secretary Heidi Alexander has refuted claims that leaks ahead of the UK Budget have damaged the economy, countering criticism from a former Bank of England chief economist who argued the speculation caused business paralysis. The government insists the Budget process is proceeding as planned, with Chancellor Rachel Reeves expected to outline her fiscal plans on Wednesday.
In a recent interview on the BBC’s Sunday with Laura Kuenssberg programme, Alexander denied that the widespread media speculation about potential tax increases had harmed economic growth. She emphasized that pre-Budget speculation is commonplace and urged the public to await the official announcement, defending the government’s approach as standard practice in the lead-up to fiscal events. This response came amid growing concerns that the leaks have created uncertainty, affecting consumer and business confidence in the UK.
Former Bank of England chief economist Andy Haldane had earlier criticized the leaks, describing them as a “fiscal fandango” that has “caused paralysis among businesses and consumers.” He attributed the flatlining of economic growth largely to this uncertainty, calling the Budget process “too lengthy, too leaky, with real costs.” Haldane acknowledged that such practices have occurred under previous governments but stressed the need for reform to prevent economic harm from prolonged speculation.
Alexander defended the government’s stance, stating that the chancellor has been clear about her priorities amidst a “challenging global economic environment.” She noted that the process has occurred “on shifting sands,” citing downgraded productivity forecasts as a factor influencing decisions. The transport secretary argued that the government has consistently advised waiting for the Budget details rather than reacting to media reports, aiming to maintain stability.
The leaks included suggestions of income tax rate increases, which would have breached Labour’s election promise not to raise basic, higher, or additional rates. However, government sources later indicated this was off the table due to better-than-expected economic forecasts. Such strategic leaks are often used to test public reaction or prepare financial markets, but in this case, they sparked debate over their impact on economic planning and trust.
In response, the Conservatives have called for an investigation into the pre-Budget leaks, with shadow chancellor Mel Stride writing to the Treasury’s top civil servant. Stride argued that the leaks have “real world consequences,” including impacts on financial markets, and demanded clarity on whether they were authorized or unauthorized. This political fallout highlights tensions over fiscal transparency and accountability in government operations.
Reeves is expected to announce smaller tax rises, such as extending the freeze on income tax thresholds, which could increase tax burdens through fiscal drag. Other measures may include freezing rail fares in England for the first time in decades and scrapping the two-child benefit cap to address child poverty, a move supported by some Labour MPs but opposed by the Conservatives on fairness grounds. The Budget will also focus on cutting the cost-of-living, reducing NHS waiting lists, and managing national debt, setting the stage for a contentious political debate as the government balances fiscal responsibility with social priorities.
