As the UK prepares for its Spring Statement, Chancellor Rachel Reeves faces a daunting task in balancing her fiscal plans with economic pressures and Labour Party pressure.
Rachel Reeves has ruled out ‘tax and spend‘ policies, signalling that she will neither raise taxes nor government budgets in her critical Spring Statement next week. Speaking in a BBC documentary, The Making of a Chancellor, Reeves also warned that the government could not afford the kinds of spending increases seen under the last Labour government.
Rachel Reeves is a British Labour Party politician serving as Member of Parliament for Leeds West since 2005.
She previously served as the Shadow Chief Secretary to the Treasury and has been a member of various parliamentary committees, including the Business, Energy and Industrial Strategy Committee and the Women and Equalities Committee.
Reeves has also been a vocal advocate for women's rights and economic equality.
A Challenge to Find Fiscal Headroom
The chancellor is expected to make cuts to some government departments on Wednesday. More money has already been allocated to defence by reducing the aid budget. However, this move has left the chancellor with less fiscal headroom. Adding to the Treasury’s in-tray, official growth forecasts for the economy are also likely to be cut.
A New Deal for the Unemployed?
Labour grandee Lord Blunkett wants Reeves to ‘loosen a little the self-imposed fiscal rules‘, calling them ‘Treasury orthodoxy and monetarism at its worst‘. He would like to see the rules relaxed by at least £10-15bn to help fund a new deal for the unemployed, getting half a million of those young people who are out of work and training into a job or a training programme.
A Tough Choice Ahead
Reeves spoke to me earlier this week amid unease among Labour MPs at the welfare changes. In the interview, she opened up on how the job is going so far following a number of controversies not only over her decisions, but also over the accuracy of parts of her CV. Asked whether she had been treated fairly, and in the same way as her male predecessors, Reeves told me: ‘I think that would be up to others to judge and people to judge over time.’
The Economy Under Pressure
Responding to Reeves‘ comments on the economy, shadow chancellor Mel Stride said: ‘The Labour chancellor promised ‘growth, growth, growth’ but since the Budget, growth is down, inflation is up, and business confidence has collapsed. Labour are having to come forward with an emergency Budget on Wednesday – a situation entirely of their own making.’
A Path Forward
Reeves insisted in her BBC interview that she had put money into public services. She said there was ‘real growth‘ in spending for each of the next few years ‘but not at the levels that we were able to deliver under the last Labour government when the economy was growing much more strongly‘. The Treasury has reiterated that Reeves‘ self-imposed rules for the economy are ‘non-negotiable’.
