U.K.’s Reeves says she hopes to avoid raising tax before next budget

British Finance ​Minister Rachel Reeves said ‌on Tuesday (June 16, 2026) she ​hoped ⁠to get to the next budget without ‌raising taxes and that ‌the government ‌now ⁠had enough fiscal headroom ⁠to withstand economic shocks.

“We made a ​decision ‌to significantly increase the headroom against our fiscal rules,” ‌Ms. Reeves said at ​aconference in ⁠London. “I believe that that was ‌the right decision.”

She also signalled a further “uplift” in defence spending in the government’s ‌Defence Investment Plan, ​due to be published before North Atlantic Treaty Organization’s (NATO’s) ⁠summit in July.

Ms. Reeves also said that it was “very important” for the country to lower its borrowing costs, which on some measures are running at ‌their highest in close to 30 years.

She said that Britain paid more to borrow than similar countries, due to ‌a ⁠sharp rise in debt during the COVID-19 pandemic under the ⁠previous Conservative government as well as shocks from the Iran war.

“It is very important that we start to bring down borrowing costs,” Ms. Reeves said. Last week Britain sold £9 billion ($12.1 billion) ​of 15-year bonds with a ‌yield of 5.3454% – he highest for any 15-year bond sold since the UK Debt Management Office was created in 1998.

By comparison, German 15-year bonds yield 3.28% and the United States pays a yield of around ‌4.83%.

“We do pay more for government borrowing in the ​U.K. than … comparable countries around the world,” Ms. Reeves said.

“Things have moved against us this year. Britain is perceived, at least, ⁠as being more exposed to an energy price shock,” she added.

Ms. Reeves said the government was taking steps to reduce the exposure of its ​economy to imported natural gas and that unlike the United States or France, it was making a substantial reduction to ⁠its budget deficit. Political uncertainty has also added to the upward pressure on gilt ⁠yields. Ms. Reeves said Greater Manchester mayor Andy Burnham – who is widely expected to challenge Prime Minister Keir Starmer for the leadership if ‌he wins election to Parliament on Thursday (June 18, 2026) – was “really clear” that he would stick to the existing fiscal rules.