LONDON - British Prime Minister Keir Starmer promised reforms to speed up the economy and overhaul the public sector after the Labour government's first budget failed to boost the growth outlook and sent government bond prices into a two-day dive.

Finance minister Rachel Reeves announced a plan on Wednesday that included big increases in tax, borrowing and spending, but Britain's budget watchdog judged that economic growth beyond next year would be weaker than it previously thought.

British government bond prices fell in the hours after her speech and again on Thursday, sending borrowing costs up sharply, before stabilizing on Friday.

ALSO READ: UK PM pledges no new taxes on workers in budget

Writing in the Financial Times on Saturday, Starmer said the budget was a "first step on our mission for growth" but also opened the way for reform of "our creaking central state" and its public services as well as more private sector investment.

"Just as we cannot tax and spend our way to prosperity, nor can we simply spend our way to better public services," he wrote, addressing concerns that the health system and other services needed more than just extra cash to improve.

Some analysts have said that without reform the government may need to raise taxes again in future to fix the public sector, despite Reeves' pledge that her budget was intended to "wipe the slate clean".

READ MORE: UK's Reeves to change debt target to boost public investment

Starmer listed plans to meet his promise to voters in July's election to double Britain's economic growth pace such as housing targets, planning system reforms, quicker approval of clean energy projects and a review of how regulators operate.

"This process involves detailed, often painstaking work. For that reason, it is not yet ready to be included in the OBR’s forecast for growth," he said, referring to the Office for Budget Responsibility whose forecasts underpin the budget.

"However, we should be optimistic about the potential," Starmer wrote, focusing on the importance of private sector investment alongside a big increase in public infrastructure spending.

READ MORE: UK's new finance minister Reeves lines up tax hikes and borrowing in first budget

The budget was quickly welcomed by the International Monetary Fund and on Saturday it also won applause from Mario Draghi, the former European Central Bank president who recently advised the European Union on how to boost competitiveness.

"The UK government has chosen to significantly raise public investment over the next five years and has adopted precise rules to ensure that borrowing is used only to fund this investment," he wrote also in the FT.

"Moreover, in order to ensure the quality of spending, transactions will be validated by independent authorities. This increases the likelihood that public investment has a positive net present value and so supports fiscal sustainability."