Rachel Reeves

**David Rubenstein** (0:02)
In the long history of the British government, only one woman has served as Chancellor of the Exchequer and, in effect, the Secretary of the Treasury of the British government. That woman is Rachel Reeves. I had a chance at Davos recently to sit down with Rachel Reeves and talk about her role as Chancellor of the Exchequer and the British economy. In your position, Chancellor of the Exchequer, you're the equivalent of the United States of the Secretary of Treasury, but also the head of the Office of Management and Budget. Do you not prepare the budget for the government?

**Rachel Reeves** (0:29)
I do. I do also prepare the budget. We have an independent forecaster who provides the forecast and costs the policies that we put forward. But what is in the budget is my choice, the policies that I put forward. We have an annual budget. I delivered the last of my budgets in November last year.

**David Rubenstein** (0:49)
In England, do you have to balance the budget or you can borrow money?

**Rachel Reeves** (0:53)
You can borrow money, but we're reducing that. I don't think that it is a good fiscal or economic policy to just constantly borrow, especially to pay for day-to-day spending. And for the last few years, like many countries, including the US, we've been running a budget deficit of around 5% of GDP. We are now bringing that down steadily. It will be just over 4%. I think this year, of them falling to about 3.5%. We've got the fastest rate of fiscal consolidation going on in the UK of any country in the G7.
Our debt burden as a share of GDP is not too far off 100%. I want to bring that down. I also want to bring down the cost of servicing that debt, because at the moment, one in 10 pounds of everything government spends is actually on debt interest. And so reducing government borrowing costs, which we managed to achieve last year, and reducing the debt burden as a share of GDP are two important priorities for me.

**David Rubenstein** (1:52)
In the budget you've proposed, you proposed a tax increase. Is that very popular to do? And will you get it approved because you control the Parliament?

**Rachel Reeves** (2:00)
We do have a big majority in Parliament. When I became Chancellor, I inherited a bit of a mess, a bit of a mess fiscally and in terms of economic performance and the cost of living. And the previous government had made a number of spending commitments without saying where the money was going to come from. And what is called the reserve, which is set aside for emergencies, had been spent three or four times over, just three months into the financial year. I had to put that right. That required a number of adjustments, both on spending and indeed on tax. When you come in as a business leader and you're taking on a business that has not been working well, that is not living within its means, does not have a clear plan, you have to sort it out. And I had to fix that mess. Now I'm being able to pursue my plans, my plans for growth and to ease the cost of living challenges. But that did require quite a big repair job to put the public finances on a solid footing again.

**David Rubenstein** (2:58)
As we look in this calendar year, do you think the UK will grow at 2% or 3% or so? What kind of projections are you for GDP growth?

**Rachel Reeves** (3:06)
Real GDP growth is expected to be around 1.5%.
Obviously nominal that would be around 3.5% a year. I want growth to be faster than that. Last year, I think we'll come out as the second fastest growing economy in the G7 when all the numbers are totted up. But none of the economies in the G7 are growing as fast as we could, as fast as I think our potential is. And that's why, as a government, growth is our number one priority for Prime Minister Keir Starmer and myself. And our industrial strategy, backing sectors like AI and tech, clean energy and life sciences and our defense sectors, focus on stability to bring down interest rates and inflation, investment, both public and private, in infrastructure, including ambitious plans for Oxford and Cambridge and also in the north of England, and then deregulation, reforming our planning system to make it easier to get things done in Britain. And I think we'll start seeing the benefits of that payoff this year.

**David Rubenstein** (4:15)
Now, many wealthy people who are not British by birth, who've moved to England in recent years, maybe to avoid their local countries' taxes, have found that recently the non-DOM taxes have increased dramatically in the UK, and they have left the UK. Has that been a problem, having wealthy people leave the UK, or it's not a big problem?