Rachel Reeves has admitted that Britain’s high tax burden could weigh on growth, while promising business leaders she will prioritise tighter government spending over sweeping tax increases in her upcoming Budget.

Speaking at the British Private Equity and Venture Capital Association (BVCA) summit in London, the chancellor said she recognised the need for a pro-growth tax policy and that “numbers must add up” through restraint in both spending and revenue measures. Reeves has ordered Cabinet ministers to stick to strict spending plans, with access to Treasury reserves being tightened to avoid overspending.

The chancellor is under pressure from economists and business groups, who fear that Labour’s pledge not to raise income tax, VAT or National Insurance could push her to target businesses instead. Last year’s £25bn increase in employers’ National Insurance contributions drew criticism from company leaders and has heightened sensitivity over further tax changes.

Reeves defended her first Budget’s tax increases as necessary to stabilise public finances, but said growth remains the “number one mission” of the government. “If you can grow the economy, decisions around tax and spend become so much easier,” she said. “Taxes have risen to such a high level because of poor growth, low investment and a deterioration in productivity. We are determined to change that.”

The government faces a £5bn shortfall after a backbench revolt forced concessions on welfare reforms and winter fuel payment changes. Reeves emphasised Labour’s commitment to cutting red tape, streamlining regulators and “backing the builders” to boost investment.

The comments follow calls from Confederation of British Industry head Rain Newton-Smith to drop Labour’s election tax pledges, warning that another levy on firms would undermine growth ambitions. Reeves’ reassurances are aimed at calming fears ahead of the 26 November Budget, which is expected to set the tone for Labour’s economic strategy.