British finance minister Rachel Reeves restated her adherence to the rule of fiscal discipline in an increasingly uncertain global environment. Just a day before her Spring Statement, Reeves stressed that the government needs to steer through the economic storms without rocking the financial boat. In her first full budget last October, Reeves came up with a fiscal rule that would require the day-to-day spending by government to match tax collection by the end of the decade. However, the rate of economic growth has been slower than expected and borrowing costs have risen, which has made her financial plan more complicated. Moreover, the advent of a global trade war following the lead of U.S. President Donald Trump in imposing import tariffs has clouded the international economic forecasts. “The world has changed and governments have to change with it,” Reeves stated during an interview on Sky News. This may well be the case, but she remains steadfast to meeting the fiscal targets and good financial governance. Reeves admitted that there were fears over whether there will be cuts in spending, but she told the public that total spending will still rise above inflation every year of this parliamentary term. She said that the money would be going to the government’s main areas of spending and therefore it was important to use it properly. Reeves also suggested, as part of her spending restraint measures, that 10,000 public sector jobs should be cut to increase efficiency. She pointed out that the civil service workforce had grown substantially during the COVID-19 pandemic, but argued that it was time to review the numbers. “It was the right thing to do at the time, but we have to make sure that the resources that are being put in place are being used to the fullest,” she said. A source from the cabinet office explained that Reeves is planning to review the departmental spending with the aim of cutting more than £2 billion every year by 2030. These measures are in line with her plan to preserve the economic credibility of the country as it navigates through the changing global environment. When Rachel Reeves steps up to deliver her fiscal update, her approach to economic policy will be under the spotlight as she charts the course for Britain’s financial future.
Rachel Reeves Stands Firm on Fiscal Rules
