Britain’s embattled Prime Minister Keir Starmer has vowed to have interest rates lowered, as he seeks to shore up business confidence to help drive the economy forward.
Days after the UK budget was delivered, Mr Starmer made a speech on Monday in which he promised to drive down inflation to spur growth in the economy, something he admitted was “not easy”.
“The most important thing that we can do for growth, the most important thing that we can do for business, is first to drive inflation down so that interest rates come down further still, and the cost of business investment comes down with it,” he said.
This was key to “retain market confidence” that would lead to economic stability “so that businesses can plan with certainty”, he told the audience at a community centre in Southwark, south London.
Mr Starmer also argued that last week’s tax and spend budget, which has been shaken by controversy and chaos, made necessary choices that were “fundamentally good for growth”.
Interest rates in the UK are not set by the prime minister. Instead, decisions are taken by the Monetary Policy Committee of the Bank of England, which meets every six weeks and has a primary goal to meet the government's inflation target of 2 per cent. Inflation currently stands at 3.6 per cent.
Mr Starmer made the speech as his Chancellor of the Exchequer, Rachel Reeves, is embroiled in controversy after she was accused of lying by failing to disclose that public finances had significantly improved in the run-up to her budget last Wednesday.
Mr Starmer said there was "no misleading” on the state of the country's finances. Critics have said cabinet members and the public were lied to when Ms Reeves said last month that there was a "black hole" in the public finances, despite the Office for Budget Responsibility saying it told her the shortfall was smaller than first expected.
While Mr Starmer rebutted the accusations that she lied, he admitted publicly for the first time that he considered breaking Labour’s manifesto pledge not to increase income tax. “There was a point at which we thought, myself included, that we might have to reach for a manifesto breach of some significance," he said.
Ms Reeves later told the BBC that she did not tell the cabinet of the more positive forecasts from the OBR, saying “you would never expect the Prime Minister and Chancellor to go through all the detailed numbers”. Despite her comments, her position appears to have been weakened by the controversy, with several opposition figures calling for her to be sacked.
But taking a more optimistic tone, Mr Starmer also set out his plans for the coming years that would address deregulation, European ties and an overhaul of welfare programmes. He argued that Britain needed to “get closer” to the EU, with a hint that his government could yet seek some new form of economic deal with the bloc.
“It is clear from all of the analysis that the [Brexit] deal that we’ve got has hurt our economy. That’s why we’ve rebuilt relations and reset relations with the EU and I’m proud that we’ve done that,” he said. “That is why we’re moving forward.”
