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Chancellor Rachel Reeves has definitively ruled out “tax and spend” policies in her upcoming Spring Statement, signaling her intention to avoid increasing taxes or government spending. This move comes when the UK faces significant fiscal challenges, including higher-than-expected government borrowing and a slowing economy.
Reeves, speaking in an interview for the BBC documentary The Making of a Chancellor, emphasized that the current economic environment does not support the expansive spending seen under the previous Labour government. “We can’t tax and spend our way to higher living standards and better public services,” she stated, reinforcing her belief that the government must exercise fiscal restraint.
The Chancellor’s position comes amid rising concerns about government borrowing. Official figures revealed that February’s borrowing was £10.7 billion—significantly higher than the £6.5 billion forecasted by the Office for Budget Responsibility. This unexpected increase in borrowing has left Reeves with less room to maneuver in her budget planning.
In the lead-up to her Spring Statement, Reeves is expected to announce further cuts to government departments, including reductions in spending on social welfare. This follows a controversial proposal by Work and Pensions Secretary Liz Kendall, who unveiled plans to save £5 billion annually by 2030 through sweeping changes to the benefits system, impacting disability and health benefits as well as support for young people on universal credit.
Reeves has also adhered to her self-imposed fiscal rules, which require the government to avoid borrowing for day-to-day spending and ensure that debt as a percentage of GDP falls by 2029-30. These fiscal constraints have garnered mixed reactions. While some, including Lord Blunkett, argue that the rules should be loosened to allow for more spending, especially on unemployment programs, Reeves has remained firm. She insists that public spending will grow, but not at the levels seen during the last Labour government.
Her approach to managing the UK’s finances has stirred debate within Labour circles, with some MPs criticizing her focus on fiscal discipline in the face of growing economic challenges. Mel Stride, the shadow chancellor, has expressed concern that Reeves’ policies have led to economic stagnation, citing falling business confidence and rising inflation.
As the Spring Statement approaches, all eyes will be on Reeves as she navigates the difficult task of balancing fiscal responsibility with the demands of economic recovery and public service improvement.
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