UK’s Reeves pitches Britain as ‘oasis of stability’ for investors

London: British finance minister Rachel Reeves said foreign investors should view Britain as an “oasis of stability” at a time of global political and economic turmoil.

Speaking at a conference for bond investors hosted by the Financial Times on Tuesday, Reeves said her government was strengthening the public finances and had in recent weeks secured new trade agreements with the United States, European Union and India.

“In the age of insecurity we live in today, I hope that people are increasingly looking at Britain and seeing an oasis of stability where we have a sustainable politics, a stable economy and also tough, robust fiscal rules,” she said.

Britain’s global reputation with investors took a big knock in 2022 when bond markets tumbled in response to budget plans from short-lived Conservative Prime Minister Liz Truss, forcing an intervention by the Bank of England.

The country’s 2016 vote to leave the European Union and subsequent protracted trade negotiations also soured some investors’ view of the economy.

Reeves is aiming to balance day-to-day spending with tax revenue by 2029/30 but has only 10 billion pounds ($13.6 billion) of leeway to meet that goal – headroom that can easily be eroded by higher borrowing costs, slower growth or unexpected spending needs.

Asked if she viewed the public finances as relatively immune to political developments in the United States or the Middle East, Reeves said: “I wouldn’t go that far.”

Reeves ruled out any extra increases to defence spending before the next election due in 2029 beyond Prime Minister Keir Starmer’s announcement in February that defence spending will rise to 2.5% of gross domestic product by 2027 from 2.3%.

“Any further increase in defence spending would be in a future parliament,” she said.