UK Govt to Empower Budget Watchdog, Boost Investor Confidence

The UK's new government unveiled plans on Wednesday to fortify the role of the nation's official budget watchdog via new legislation. Prime Minister Keir Starmer aims to enhance Britain's investment appeal.

The legislation mandates that significant fiscal events, including permanent tax and public spending changes, must be assessed by the Office of Budget Responsibility (OBR). The announcement follows a tumultuous period in 2022 when former Prime Minister Liz Truss and finance minister Kwasi Kwarteng's unvetted 'mini-budget' plan led to a crash in government bond prices.

Starmer, alongside finance minister Rachel Reeves, aims to drive Britain to the top of the G7 economies in sustainable growth. The new policies will rely on a mixture of planning reforms and increased investment, with fiscal rules resembling those of the Conservative government under Rishi Sunak but allowing for more borrowing to fund investments. Additionally, the government will establish a National Wealth Fund to promote investment in crucial industrial sectors, including renewable energy.

(With inputs from agencies.)