Reeves pushes EU youth mobility plan as budget gap looms

London — Chancellor Rachel Reeves, on the eve of Labour’s annual conference, urged the independent Office for Budget Responsibility to score the potential economic benefits of a European youth mobility scheme in its November Budget forecasts, arguing the plan could lift growth and reduce the need to raise taxes.

Under the plan outlined by Reeves, individuals aged 18 to 30 would be allowed to live and work in Britain for two years, but would not be given the right to remain. The scheme is intended to be reciprocal, meaning British youths would also be able to take up opportunities to work in EU countries. Reeves has framed the proposal as a way to strengthen the economy without automatically increasing tax burdens, a core aim of her fiscal strategy ahead of the Budget.

But the remarks drew swift criticism from opponents, who characterized the gambit as “desperate stuff.” Shadow Business Secretary Andrew Griffith challenged Reeves over the plan, suggesting it was either a modest exchange scheme with similar numbers in either direction or another open-door immigration policy, but one that would not meaningfully spur growth. Griffith’s accusation echoed broader scepticism from the Conservative benches about the fiscal arithmetic behind Reeves’s proposals. Paul Johnson, the former director of the Institute for Fiscal Studies, warned that even with generous assumptions the yield from such a scheme would be small: around half a billion pounds in a year if 50,000 entrants contributed £10,000 each in tax.

The debate matters because the OBR’s scoring of flagship government policies—such as trade deals and planning reforms—helps determine how big any future tax rises must be to close a gap that one estimate puts at up to £50 billion in the November Budget. Reeves has already signaled she intends to maintain her manifesto pledge not to raise income tax, VAT, or National Insurance, but any downgrade in the OBR’s productivity forecasts could force additional fiscal consolidation.

Analysts warn that even a modest revision to productivity could have outsized effects on public finances. Allan Monks, UK economist at JPMorgan, estimated that trimming productivity growth by 0.1 percentage point in the OBR’s medium-term forecast would necessitate about £9 billion in additional measures to keep the numbers balanced. Market participants are watching whether the OBR will adjust its projections downward after a July acknowledgment that its past growth forecasts had been too optimistic. The agency previously suggested UK growth could be up to 4% lower than it would have been had the country remained in the EU, underscoring the fragility of the current framework.

As Labour officials press the case for the youth mobility concept, the broader question remains how much the scheme would actually move the dial on growth and taxes. Critics insist the potential upside is limited by the reciprocal nature of the program and by the need for other structural reforms to deliver sustained productivity gains. Supporters, meanwhile, argue that any positive signal to the OBR could help dampen calls for abrupt tax increases while the government pursues a wider set of growth-oriented policies.

With Labour conference underway, Reeves faces a high-stakes test: secure an OBR assessment that supports a more favorable fiscal path while protecting the party’s pledge on tax. The outcome will influence how the government addresses a looming gap in its public finances and shape the contours of the autumn Budget.