UK fiscal watchdog official says Reeves pre-budget speech was not misleading

LONDON, Dec 2 (Reuters) - A top official from Britain's fiscal watchdog said on Tuesday he did not think comments made last month by finance minister Rachel Reeves about the difficult budget situation that she was facing were misleading.

In a speech on November 4, Reeves appeared to lay the groundwork to raise income tax rates, breaking the Labour Party's promise to voters before the 2024 election. She cited a "weaker than previously thought" productivity performance.

But the Office for Budget Responsibility (OBR) had also provided Reeves with forecasts showing its productivity downgrade had been offset by increases in real wages and inflation, factors Reeves did not mention.

She has been criticised by political opponents for misleading the public and seeking to find a reason to raise taxes to justify an increase in welfare spending, a charge she denies.

"I don't think it was misleading for the chancellor to say that the fiscal position was very challenging at the beginning of that week," David Miles, a member of the OBR's Budget Responsibility Committee, told lawmakers.

However, Miles cast doubt on the veracity of briefings given to the media later that month in which unnamed government sources said improvements to the OBR's forecasts meant the government could avoid raising income tax rates.

The British government bond market moved sharply after those briefings with borrowing costs falling.

"It certainly didn't reflect anything that was news from the OBR being fed into the government," Miles said.

Reeves last week announced 26 billion pounds ($34.3 billion)in tax increases to remain on track to meet her fiscal targets and fund an increase in welfare for families with children.

($1 = 0.7583 pounds)

(Writing by Andy BruceEditing by William Schomberg)