Rachel Reeves cautions that reducing investment could harm the ‘bedrock of UK economy’ – live business updates | Business

A group of leading economists is urging Chancellor Rachel Reeves to change the UK’s fiscal rules to allow more government borrowing for public infrastructure investment. In a letter published today, they warn that under-investment has led to economic decline and social problems. The economists believe that the government’s current debt rules create a bias against investment, hindering long-term fiscal sustainability. Reeves has pledged to lead a pro-growth Treasury and is expected to outline her plans in the upcoming budget. The economists argue that cuts to public investment must be avoided and call for a pro-investment fiscal framework that focuses on long-term sustainability. The group includes prominent figures such as Lord Gus O’Donnell and Professor Mariana Mazzucato. The chancellor is expected to address the £22 billion overspend by Whitehall departments by raising taxes and cutting spending. However, the economists warn against reducing investment, stressing that public infrastructure plays a crucial role in national renewal. The group suggests that a change in fiscal rules and the mandate for the Office for Budget Responsibility is necessary to prioritize long-term benefits of increased public investment. This call for change comes amid news that UK manufacturer TI Fluid Systems rejected a takeover offer from Canadian rival ABC Technologies, and a report showing that the gap in rents between North and South England is at its lowest level in 11 years. In other news, UK asking prices for homes have risen sharply this month, with increased market activity and falling mortgage rates driving demand.

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