RACHEL Reeves will unveil her Spring Statement today as the state of the public finances are laid bare.
The Chancellor will deliver a 20-minute assessment on the UK economy – but she has already signalled it won’t be a “tax and spend” event.
However, she is facing trouble ahead on several fronts with government borrowing higher than predicted and growth expected to plummet.
She will be told that her headroom of around £10billion from last year has been wiped out.
Ms Reeves will deliver the Budget after PMQs in the House of Commons at 12.30pm.
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GROWTH
The decisions Rachel Reeves makes will be largely dictated by the Office for Budget Responsibility, who will tell her of the UK’s growth forecast.
It is expected to downgrade predictions for growth in the UK economy from two per cent for this year to around one per cent.
She will attempt to argue that the global outlook is to blame, telling MPs that “the world has changed”.
Business leaders have already been attacking the government, saying their decision to raise NI has worsened the UK’s prospects.
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SPENDING CUTS
Rachel Reeves is expected to announce further spending cuts to Whitehall departments in a bid to balance the books.
She has put in place tough fiscal rules – not to borrow to fund day-to-day spending, and to get debt falling as a share of the economy by the end of the decade.
The Chancellor has her sights set on the civil service with its size ballooning since the pandemic.
When pushed on how many people could be forced out of a job she said the figure could hit 10,000 employees.
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TAX
The Chancellor has also spelled out that the Spring Statement won’t be the occasion to raise or lower taxes.
She vowed to have only one major fiscal event per year so any such decisions will have to be put back until the Autumn.
Speaking at the weekend, Ms Reeves said: “We did have to put up some taxes on businesses and the wealthiest in the country in the Budget.
“We will not be doing that in the Spring Statement next week.”
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WELFARE
Rachel Reeves and Welfare Secretary Liz Kendall delivered £5billion of cuts to the benefits bill last week.
This will make up some of the £10billion wiped out from the Chancellor’s headroom.
The impact of the cuts will be revealed today when an assessment is published – likely to spark fury in Labour ranks.
Labour MPs are lobbying the government so individuals don’t lose several thousand pounds as part of the cuts.
The health and disability bill which sits at £65billion is expected to rocket to £100billion over the next four years.
