Rachel Reeves is fervently defending her statements regarding her Budget decisions today, as Keir Starmer steps in to support her.

The Chancellor is set to face a challenging television interview amidst increasing demands for her resignation, following severe warnings reminiscent of ‘Project Fear’ concerning the public finances.

Prior to revealing the fiscal package, Ms. Reeves had spent weeks emphasizing a significant deficit in the Treasury’s accounts, as highlighted by its watchdog.

However, it has come to light that the Office for Budget Responsibility (OBR) had informed her as early as September that productivity downgrades were being counterbalanced by improved tax revenues.

In reality, the Budget forecasts showed a slight surplus, with only Labour’s political strategies necessitating a substantial tax increase package.

In response, Downing Street has launched an urgent effort to bolster the Chancellor over the weekend, asserting that Sir Keir had approved an unusual pre-Budget address where Ms. Reeves highlighted the challenges she was confronting.

Rachel Reeves is desperately defending her ‘lies’ about her Budget choices today as Keir Starmer tried to shore her up

A letter from the OBR to the Treasury Select Committee has been published spelling out the timetable of exactly what forecasts were provided to the Chancellor as she drew up her Budget package

Sir Keir is due to hold a press conference tomorrow in which he will line up behind Ms Reeves, effectively intertwining their fates. 

No10 sources have also risked fuelling the backlash by dismissing criticism as a ‘silly row brought about by people who can’t do maths’. The Tories have accused Ms Reeves of ‘lying’ to soften the country up for tax increases.

A poll for the Mail on Sunday has found 68 per cent of voters believe Ms Reeves should resign, with just 32 per saying she should stay. 

Anger reached fever pitch on Friday after a letter from the OBR to the Treasury Select Committee was published.

In a highly unusual step, it spelled out the timetable of exactly what forecasts were provided to the Chancellor as she drew up her Budget package. 

Asked whether Sir Keir was aware that the OBR had made clear that the true economic picture was rosier than had been painted, a No10 source said: ‘The Prime Minister and Chancellor worked together on the Budget, which made fair and necessary choices’.

Sources told the Telegraph that Ms Reeves’ comments had been ‘entirely accurate’ and Sir Keir was aware of ‘the content of the speech’. 

Shadow chancellor Mel Stride has asked the Financial Conduct Authority for a full investigation ‘into possible market abuse by all those who would have had access to confidential information including at HM Treasury and 10 Downing Street’.

He suggested that markets could have been manipulated by knowingly false statements.

But Ms Reeves has flatly denied misleading the public, telling The Guardian that the tax raid was still ‘fair and necessary’.

As the Budget loomed, the Chancellor flagged that the OBR was downgrading productivity, as well as blaming everything from Brexit to Tory austerity and Donald Trump for a grim outlook.

Ms Reeves made a highly unusual ‘scene setter’ speech in Downing Street on November 4 hinting that she would have to breach Labour’s manifesto promises not to increase income tax. 

And six days later she gave an interview to the BBC in which she insisted that the only way to balance the books without an income tax hike was to cut ‘capital spending’ – something she made clear she was not willing to do.

However, the letter from the OBR to the Treasury committee revealed that it told Ms Reeves in September that revisions to tax revenues had almost completely offset a £21billion productivity downgrade.

By October 31 the watchdog said it had informed Ms Reeves that she was in fact meeting both her fiscal rules without the need for any action – giving her more than £4billion in headroom.

The Tories have accused Ms Reeves of ‘lying’ to soften the country up for tax increases

The OBR made clear it had told Ms Reeves as long ago as September that productivity downgrades were being offset by better tax revenues

In the event the Chancellor announced an eye-watering £30billion package of tax rises on Wednesday, a large chunk of which went on benefits rises that had been demanded by mutinous Labour MPs. 

She had already U-turned on the hints of income tax rises – if they were ever seriously considered – but only after the fact they were not happening was leaked to the Financial Times. 

No10 and Treasury insiders have been pointing out that the OBR’s forecast of a surplus did not account for the U-turn on scrapping the winter fuel payment, or bowing to Labour MPs on abandoning welfare curbs and abolishing the two-child benefit cap.

Together those decisions cost the government around £10billion a year. Ms Reeves has also insisted she needed to rebuild the government’s headroom, an effective acknowledgment that the £10billion of space she left at her Budget last year was too small.