Business
Reeves: PM and I decided ‘as a team’ not to hike income tax
Rachel Reeves said she and Sir Keir Starmer had decided “as a team” not to raise income tax as she hit out at “too many leaks” in the run-up to Budget.
The Chancellor told MPs the “very close partnership” between herself and the Prime Minister meant the move to extend a freeze on tax thresholds instead had been made jointly.
It came as a senior Treasury official confirmed a leak inquiry into reports of economic policy that emerged before Ms Reeves’s statement to the Commons would cover ministers as well as civil servants and advisers.
Appearing before Parliament’s Treasury Select Committee, the Chancellor said a Financial Times story which revealed she had dropped plans for an income tax rise was “incredibly damaging”.
She said: “It was not an off-the-record briefing, it was a leak. I’m absolutely categorical that that was not an authorised briefing.”
She said the report was “frustrating” because it gave the impression she might have dropped her commitment to rebuilding the “headroom” she had against her rule of balancing day-to-day spending with tax receipts.
In the weeks before the Budget, the Chancellor herself fuelled speculation she was preparing to raise income tax in a speech that sought to roll the pitch for the autumn statement by warning of difficult decisions ahead.
She had suggested that sticking to Labour’s pre-election promises, which included a pledge not to hike income tax, would only be possible with “deep cuts” to public investment.
A leak to the Financial Times later revealed the proposal to increase income tax rates for the first time in 50 years had been dropped.
Speaking on Wednesday, Ms Reeves said: “The Budget had too much speculation. There were too many leaks, and much of that, those leaks and speculation, were inaccurate, very damaging, as well as the IT security issues… The OBR’s report also noted that the spring statement had been accessed early as well.
“I want to say on the record how frustrated I am and have been by these incidents and the volume of speculation and leaks, and that is why I am doing something about it, because we cannot allow this to happen again.
“A leak inquiry is under way with my full support, being led by the permanent secretary at the Treasury, and we are also conducting a review of the Treasury security processes to inform future fiscal events.”
Appearing alongside Ms Reeves, Treasury permanent secretary James Bowler confirmed the leak inquiry would cover ministers as well as officials and advisers.
Asked whether the Prime Minister made the decision not to raise income tax, Ms Reeves said she had met Sir Keir “two, three times a week during the Budget process”.
She said: “That is not always the case between chancellors and prime ministers. I recognise that. But there is a very close partnership between myself and the Prime Minister.
“And so we took him through all of the numbers and all of the options and we decided it together as a team, because that is what the Prime Minister and I am.”
Former OBR chairman Richard Hughes resigned after the watchdog’s assessment of the Chancellor’s plans was inadvertently made available online before she delivered her speech last month.
Meanwhile, Ms Reeves faces accusations of misleading the public about the state of the public finances after a letter from the OBR contested her narrative that she needed to raise taxes to fill a so-called “black hole”.
The OBR’s pre-Budget forecasting instead suggested Ms Reeves’s spending plans would run a surplus because of changing economic headwinds.
A Tory-led debate in the Commons on Wednesday afternoon will see the party use a parliamentary process known as a censure motion to call on Ms Reeves to apologise for how the Budget unfolded.
Addressing the Treasury Committee, Ms Reeves said there had been a lot of information shared between the OBR and the Treasury in the weeks leading up to the autumn statement.
“Pre-measures is not the final word from the Office for Budget Responsibility, because then you have post-measures forecasts,” she told MPs.
“They take into account the policy decisions that we take as a Government on tax and spend… so there was plenty of additional information being shared between the OBR and the Treasury between October 30 and major measures one and indeed major measures two.”
Ahead of the Conservative-led debate later, shadow chancellor Sir Mel Stride accused Ms Reeves of putting “party before country”.
He said: “Rachel Reeves has repeatedly misled the British public. She promised she wouldn’t raise taxes on working people – and then she did. She insisted there was a black hole in the public finances – and there wasn’t.”
The Lucid logo is shown at the Los Angeles Auto show on Nov. 20, 2025.
Mike Blake | Reuters
DETROIT — Lucid Group suspended its vehicle production guidance for the year as its incoming CEO evaluates the all-electric vehicle manufacturer’s business operations, including the potential for lower output of EVs.
The company on Tuesday also said it needs to lower its “elevated inventory” of vehicles, which for automakers has historically meant decreasing or idling vehicle production.
A company spokesman told CNBC that there is currently no plan to idle its sole U.S. plant in Arizona, but incoming CEO Silvio Napoli said he is continuing to evaluate Lucid’s business.
“An essential objective over time is to build a more cost-efficient company, one that progresses in funding its own growth. That means being rigorous in delivering our commitments,” Napoli said Tuesday on Lucid’s quarterly results call with investors. “In simple words, this means making clear choices on where to invest and, just as importantly, where not to.”
Napoli said he plans to review the company’s operations over the next several weeks before updating investors on the company’s guidance when Lucid reports its second-quarter results at an unspecified date.
The company’s prior production guidance was between 25,000 to 27,000 units in 2026. Lucid executives said plans for cost-cutting, autonomous vehicles with Uber and Nuro, and the company’s “path to profitability” outlined in an investor day in March remain intact.
Lucid has produced roughly 3,200 more vehicles than it has sold since 2024, according to its annual production and deliveries. That includes a difference of roughly 2,000 units last year and 2,400 vehicles during the first quarter of 2026.
The pulled guidance occurred as the company reported first-quarter results that were in line with preliminary results released by the company a month ago, but that still significantly missed Wall Street’s expectations.
“We ended the quarter with elevated inventory that we expect to convert to revenue and cash as deliveries normalize, while maintaining alignment between production and sales cadence. Our focus is on disciplined execution — driving structural cost improvements, managing capital efficiently, and improving operating leverage as we scale,” Lucid CFO Taoufiq Boussaid said in a statement.
Here’s how the company performed in the first quarter compared with average estimates compiled by LSEG:
- Loss per share: $3.46 vs. a loss of $2.64 expected
- Revenue: $282.5 million vs. $440.4 million expected
The company’s revenue increased roughly 20% year-over-year but was far lower than the 87.4% jump analysts were expecting, according to LSEG.
The all-electric vehicle maker said a seat supplier issue “significantly affected” deliveries of its crucial Lucid Gravity SUV during the quarter that resulted in a stop-sale of the vehicle due to safety concerns.
Boussaid said the seat issue caused a more than $200 million revenue impairment during the first quarter.
Lucid produced 5,500 vehicles and delivered 3,093 vehicles in the first quarter of 2026.
The automaker, which is heavily backed by Saudi Arabia’s Public Investment Fund, said it has sufficient liquidity through the second half of 2027. It ended the first quarter with approximately $4.7 billion, including a recent capital raise and delayed draw term loan provided by PIF.
Lucid on Tuesday said production of a new vehicle plant in Saudi Arabia continues despite the ongoing war in nearby Iran. The company said it has not experienced any significant interruptions to the facility other than some delays in shipping.
The company also said it is adjusting its production reporting to count vehicles once they complete the company’s “factory gating process,” which includes vehicles that may not be completely built and are sent to operations elsewhere for completion.
Britain’s long-term borrowing costs have surged to their highest level since 1998, driven by escalating inflation worries and political uncertainty ahead of this week’s local elections.
On Tuesday afternoon, the yield on 30-year UK government bonds, known as gilts, hit a 28-year peak, climbing 0.14 percentage points to 5.798%.
This increase in yield signifies a drop in bond prices, as the two move inversely. Consequently, the government faces higher expenses when seeking to borrow from financial markets.
The yield on 10-year gilts also rose, lifting by 0.15 percentage points to 5.122%, though this remains below recent highs reported last month.
In contrast, US 10-year treasury notes were flat on Tuesday, despite a steady increase over recent weeks.
Gilt yields have grown amid growing predictions that the conflict in Iran will drive higher inflation due to spiking energy costs, which is then likely to cause the Bank of England to increase interest rates.
City traders currently expect the central bank to vote for at least two interest rate hikes in the coming months, despite the Bank maintaining the current rate of 3.75% last week.
The rise in gilt yields means the Government will face higher debt interest costs, providing more strain on the Chancellor’s spending powers.
It comes amid a backdrop of significant pressure on Prime Minister Sir Keir Starmer in the run-up to the UK local elections.
The pound was broadly flat at 1.353 versus the dollar on Tuesday.
The FDA blocked the publication of several studies supporting the safety of vaccines against Covid and shingles in recent months, a Health and Human Services Department spokesperson confirmed on Tuesday.
It’s the latest effort by the Trump administration to challenge safe and effective shots in the U.S. and make them harder to access for some patients. Under Health and Human Services Secretary Robert F. Kennedy Jr., a prominent vaccine skeptic, federal health agencies have softened Covid shot recommendations, cut back research on vaccine development and attempted to overhaul the childhood immunization schedule, among other efforts.
FDA scientists worked with data firms to analyze millions of patient records for the studies, which found side effects of the shots to be rare, the New York Times first reported on Tuesday.
In October, the scientists were directed to withdraw two Covid shot studies that had been accepted for publication in medical journals, the Times reported. In February, top FDA officials did not sign off on submitting study abstracts on Shingrix, a shingles vaccine, to a drug safety conference, the paper added.
The HHS spokesperson told CNBC the recent studies were “withdrawn because the authors drew broad conclusions that were not supported by the underlying data.”
“The FDA acted to protect the integrity of its scientific process and ensure that any work associated with the agency meets its high standards,” they added.
When asked about the shingles vaccine research, the HHS spokesperson said the design of that study “fell outside the agency’s purview.”
EV maker Lucid suspends production guidance amid incoming CEO’s business review
Long-term borrowing costs in UK reach 28-year high amid rising inflation
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