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Shadow chancellor alleges market abuse ahead of Budget
Shadow Chancellor Mel Stride has urged the UK's Financial Conduct Authority (FCA) to investigate potential market abuse by Treasury and Downing Street officials in the lead-up to Chancellor Rachel Reeves' autumn Budget, accusing them of misleading briefings that distorted public perception of the nation's finances.
Stride's call follows revelations that Reeves and senior officials were aware the UK's fiscal position was stronger than publicly suggested-yet proceeded with warnings of economic downturns, which critics argue fueled unnecessary market volatility. The Conservative Party has demanded Reeves' resignation, while Stride's letter to the FCA cites concerns over insider leaks, selective disclosures, and political spin influencing gilt markets.
"Confidential market-sensitive information appears to have been spun, leaked, and misused-and markets, businesses, and families have paid the price," Stride wrote.
Mel Stride, Shadow Chancellor
OBR documents contradict pre-Budget warnings
Newly disclosed correspondence from the Office for Budget Responsibility (OBR) undermines Reeves' public statements. On 31 October, the OBR informed the Treasury it was on track to meet its core borrowing rule with a £4.2bn surplus-though this fell short of the £9.9bn buffer Reeves had secured in 2024. Earlier, on 17 September, OBR Chairman Richard Hughes had privately assured Reeves that finances were healthier than widely assumed.
Despite this, Reeves delivered a 4 November Downing Street address warning of weaker-than-expected productivity and its "consequences for public finances," while hinting at possible tax hikes. On 10 November, she told the BBC that adhering to manifesto pledges would require "deep cuts in capital spending." Media reports at the time suggested a £20bn shortfall loomed-figures now disputed by the OBR's disclosures.
Political fallout and market reactions
Conservative leader Kemi Badenoch accused Reeves of "deliberately misleading" the public to justify tax increases, calling her conduct "unforgivable." The SNP joined the FCA appeal, alleging "false and misleading" briefings designed to manipulate expectations. The FCA confirmed receipt of Stride's letter but has not yet announced an investigation.
Markets responded positively to Reeves' 27 November Budget, which included tax threshold freezes (pulling millions into higher brackets) and the abolition of the two-child benefit cap. Gilt yields dipped slightly, signaling investor confidence in her fiscal plan. However, critics argue the pre-Budget rhetoric-including hints at income tax hikes-unnecessarily rattled markets.
"She was raising taxes to pay for welfare. The chancellor called an emergency press conference telling everyone how terrible the finances were-and now we see the OBR told her the opposite," Badenoch stated.
Kemi Badenoch, Conservative Leader
Reeves defends fiscal "resilience" strategy
In a BBC interview on Sunday, Reeves dismissed accusations of deception, framing the £4.2bn headroom as insufficient for a "resilient" Budget. She noted that proceeding with such a narrow surplus-"the lowest any chancellor has ever delivered"-would have invited criticism for fiscal recklessness. Instead, she opted to expand the buffer to £21.7bn through tax adjustments.
The Treasury Select Committee has faced pressure to summon Reeves for questioning on Monday. Conservatives allege her team leaked selective OBR data to justify tax rises while withholding positive updates, a claim the Treasury denies. The FCA's potential probe would focus on whether such actions constituted market manipulation under UK financial regulations.
Key dates in the controversy
- 17 September: OBR informs Reeves finances are stronger than perceived.
- 31 October: OBR confirms £4.2bn borrowing headroom.
- 4 November: Reeves warns of productivity downturn in Downing Street speech.
- 10 November: Reeves tells BBC manifesto pledges may require spending cuts.
- 27 November: Budget unveiled; gilt yields fall slightly.
