Reform UK's Farage waters down tax pledges in pitch for economic credibility

LONDON (Reuters) -Nigel Farage, leader of Britain's populist Reform UK, watered down some of his pledges on Monday, saying his party could not immediately implement substantial tax cuts if it won power because of what he called the dire state of public finances.

Reform, which has maintained around a 10-point lead over the governing Labour Party in the polls for months, had pledged to cut taxes by 90 billion pounds ($121 billion) a year - a plan economists described as fanciful - if it won the next national election.

But on Monday, veteran Brexit campaigner Farage said such tax cuts could only be introduced after the party had convinced the markets it had fixed some of the British economy's problems.

'WE ARE BEING MATURE'

It is the latest step by Reform, better known for its sometimes chaotic campaigning against illegal immigration, to show a more pragmatic side before the next election.

"We are being mature, we are being sensible, and we are not over-promising," Farage told a press conference in the City of London, the capital's financial district.

"Do we want to have a smaller state? Yes. Are we going to cut the benefits bill? Yes. Will the civil service be smaller? Yes. Will we get a grip on public sector pensions? Yes. But we can't have massive tax cuts until the markets can see we've at least got these things in hand."

Prime Minister Keir Starmer won a large majority in parliament last year and does not need to call an election until 2029.

But Farage argues a national poll could come earlier, in 2027, predicting that markets will eventually push finance minister Rachel Reeves into implementing an austerity budget that could force the Labour government to call an early election.

Reeves, who says her priority is growing the economy, is expected to raise tens of billions of pounds in taxes in her November 26 budget.

NEED TO CONVINCE MARKETS

Farage's comments appeared to be an acknowledgement that his party would have to convince the markets that a Reform government could be fiscally responsible after their reaction helped to force out former Conservative Prime Minister Liz Truss over her largely unfunded tax-cutting mini-budget in 2022.

Labour criticised Farage's plans, saying they would "take us back to austerity", while the opposition Conservatives accused his party of being a "one-man band with no experience of government" which could not be taken seriously on the economy.

But Farage blamed the Labour government and earlier Conservative administrations for failing to manage Britain's high rate of borrowing and large debt burden.

And he again said only Reform could sort out an economy by cutting spending, convincing the richest to return to Britain and becoming the party of both business and working people, representing "alarm clock Britain".

He said the party would make some modest tax changes immediately, such as removing an inheritance tax on family farms and family-run businesses and raising the income tax thresholds, but more substantial tax cuts would have to wait.

"We want to cut taxes, of course we do," he said, "but we understand substantial tax cuts given the dire state of debt and (of) our finances are not realistic at this current moment in time." ($1 = 0.7451 pounds)

(Reporting by Elizabeth Piper; Editing by Alex Richardson)