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Britain’s finance minister, Rachel Reeves, says the government will stick to its fiscal rules even as the economy strains. In comments to Sky News on Sunday, she stressed the importance of fiscal responsibility. Reeves had promised to balance day-to-day government spending with tax revenue by the decade’s end. However, slow economic growth and rising borrowing costs have complicated that goal. Fears of a global trade war, stoked by U.S. President Donald Trump’s import tariffs, have also clouded the international economic outlook. To meet its fiscal targets, the British government has already introduced welfare cuts totaling £5 billion ($6.5 billion) annually. Reeves will announce further steps to give herself 10 billion pounds of room for maneuvering in her Spring Statement on Wednesday. Reeves pushes targeted spending cuts while prioritizing key sectors In response to questions about potential spending cuts, Reeves also covered more ground, promising that public spending would still grow faster than inflation. However, she stressed that spending should be allocated to certain priorities, including defense, which has received budget increases amid Trump’s demands that European allies do more to ensure security on the continent. To cut government spending, Reeves has said she wants to slash 10,000 civil service jobs and reduce government running costs by 15%. This will save over 2 billion pounds ($2.58 billion) annually. While acknowledging the fight to overcome more than a decade of economic stagnation, she stressed changes made to the economy. Reeves promised to follow fiscal rules that did not require new taxes and suggested she may scrap the £1 billion-a-year digital services tax to strike a deal with President Trump and avoid tariffs in trade. However, the move has sparked criticism after the government also proposed saving £5 billion on welfare by cutting disability benefits, prompting backlash from Labour backbenchers and unions. Other departments, however,…

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Filed under: News - @ March 23, 2025 3:25 pm