Rachel Reeves rules out return to austerity after dark rhetoric criticised

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UK Chancellor Rachel Reeves will attempt to counter claims on Monday that she has been badmouthing the economy, telling the Labour Party conference that there will be “no return to austerity” and insisting her Budget will have “real ambition”.

Reeves and Chancellor Sir Keir Starmer have been accused of creating a sense of economic gloom by warning of dire public finances and a “painful” Budget next month, with Consumer confidence plummeted in September.

Last week, Andy Haldane, the former chief economist of the Bank of England, said the government had created a sense of “fear and anxiety”. A figure at a major bank said: “They are struggling to get out of the recessionary hole they have put themselves in.”

Private sector activity figures released on Monday also showed that both manufacturing and services were losing momentum. The S&P Global Flash UK PMI survey fell to 52.9 in September, down from 53.8 in August and below forecasts of 53.5.

With over 500 paid corporate characters 3,000 pounds per person To attend a “working day” at the party conference in Liverpool on Monday, Reeves will attempt to paint a picture of a brighter future for Britain in his speech to party delegates.

“My optimism for Britain remains as bright as ever,” she will say. “I can see the prize being awarded, if we make the right choices now. And stability is the vital foundation on which all our ambitions will be built.”

Reeves warned of tax rises in her October 30 Budget, saying “any plan for growth without stability leads only to ruin”.

But she will tell Labour members: “There will be no return to austerity. The Conservatives’ austerity policy is a destructive choice for our public services — and for investment and growth.”

Talking to BBC Today In her programme on Monday, she promised “to increase real government spending in this parliament” but added that “the only way to sustainably fund public services is through growing the economy”.

Her more optimistic words were intended to lift spirits. Labor The conference was overshadowed by internal squabbles at Number 10 and a row over “freebies” given to Starmer and other ministers, along with criticism of the government’s decision to cut winter fuel payments for 10 million pensioners.

Boos erupted at the party conference on Monday when it decided to postpone a vote on fuel payment cuts until Reeves and Starmer had spoken.

The chancellor and prime minister will try to reassure Britain’s business bosses that they remain firmly on their side, despite corporate concern on their gloomy tone on public finances, new workers’ rights and potential tax increases.

Tickets for the day of the conference sold out within 24 hours, although prices have soared from around £2,100 for the same event when the party was in opposition last year.

Starmer, Reeves and business secretary Jonathan Reynolds, who courted company bosses ahead of the election, are facing growing scepticism from some corporate leaders.

The chairman of one of the FTSE’s 10 most valuable companies told the Financial Times that Labour’s strategy so far appeared to be to “prioritise growth and at the same time weaken every lever of growth”.

The decision to hold a global investment summit on 14 October to promote the UK as an investment destination has also been criticised, while Budget decisions affecting corporation tax are still pending. A new investment minister has yet to be appointed.

Opposition leaders hope Labour will bring political and economic stability after a difficult period of frequent changes of prime minister under the Conservatives, but some have grown increasingly concerned about the government’s lack of action since the July 4 election.

The Labour Party said the business day event, sponsored by companies including HSBC, Mastercard and Intuit, was double the size of last year with more than 100 chief executives and chairmen attending, including representatives from Blackstone, Santander UK, Uber and Shell.

But one senior lobbyist said the day’s ticket prices were now so high that they were no longer worth attending, while another joked that her organisation had only bought one ticket and the chief executive would have to take notes himself.

Reeves will use her speech on Monday to confirm plans for a new industrial strategy, highlighting to international investors where she sees the most promising growth areas.

She will start the discussion on policy by publishing a green paper at the Budget. But the chancellor will announce that the final policy will not be completed until spring next year.

Reynolds told the FT ahead of the Labour Party conference that he hoped to name the chair of the new industrial strategy council before the investment summit in October.

The business day event will be a time for bosses to lobby Starmer to oppose what they see as excessive regulation of the labour market and to oppose the possibility of a rise in government taxes on businesses beyond corporation tax, which Labour has said it will not raise.

Many are particularly concerned about the prospect of increasing capital gains tax or removing exemptions that allow owners of private businesses or shares in Aim-listed companies to avoid paying it.

Reeves will also appoint a new “Covid corruption commissioner” to investigate more than £600m worth of personal protective equipment contracts awarded under the previous Conservative government as Labour tries to divert attention from the furore over free clothes for senior ministers.

Additional reporting by Valentina Romei