Chancellor Rachel Reeves has ruled out adopting “tax and spend” policies in her upcoming Spring Statement, making it clear that neither tax increases nor substantial boosts to government budgets will be proposed. In a recent documentary, Reeves highlighted that the current economic environment does not support the kind of large-scale spending seen in past Labour administrations.
“We cannot rely on taxing and spending to achieve higher living standards and better public services. That approach isn’t feasible in today’s world,” Reeves stated. Her comments come ahead of her Spring Statement, where she is expected to announce potential cuts to certain government departments. Notably, additional funding for defense has already been secured by reducing the aid budget.
This stance represents a departure from her autumn Budget, which saw significant tax rises and increased public spending, largely funded by contentious levies on businesses. However, Reeves now faces growing pressure as government borrowing in February surged to £10.7 billion, well above the forecast of £6.5 billion, leaving her with limited room for fiscal maneuvering.
Compounding the challenges, official growth forecasts for the economy are anticipated to be revised downward, further straining the Treasury’s financial planning. At the same time, Work and Pensions Secretary Liz Kendall has unveiled sweeping reforms to the benefits system, aiming to save £5 billion annually by 2030. These changes, intended to foster a more “pro-work system,” will affect individuals claiming disability and health benefits, as well as those under 22 receiving universal credit top-up payments.
As the Spring Statement approaches, attention is focused on how Reeves will address these fiscal pressures while striving to maintain economic stability and improve public services.
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