Britain’s new Treasury chief, Rachel Reeves, is set to address Parliament on Monday and is expected to reveal a significant shortfall in public finances, estimated at around 20 billion pounds. Reeves accuses the previous government of concealing the true state of the nation’s finances and failing to make tough decisions. This revelation follows a recent departmental review conducted after Reeves assumed office.
The Labour Party, led by Prime Minister Keir Starmer, came into power after winning the recent election. During the election campaign, both Labour and the Conservatives faced criticism for not addressing the significant financial challenges facing the country. Labour promised not to increase taxes on “working people” and committed to stimulating economic growth to generate additional government revenue.
Former Treasury chief Jeremy Hunt criticized Labour for supposedly exaggerating the economic situation to justify impending tax hikes. Hunt suggested that the previous government was not transparent about the financial challenges facing the country and accused Labour of seeking to raise taxes.
Reeves’s upcoming speech did not mention potential tax increases, and it is anticipated that any such measures would be revealed in the government’s budget later this year. Reeves plans to focus on cutting down on wasteful spending, halting non-essential expenditure on consultants, and selling surplus government property.
According to findings released by Starmer’s office, the government accuses the Conservatives of making substantial financial commitments without a clear funding source. The current state of the military, the National Health Service, and challenges with migrant crossings over the English Channel were highlighted as areas needing urgent attention.
The Institute for Fiscal Studies, an independent economic policy think tank, had previously warned about the precarious fiscal position of the U.K. The institute emphasized the need for the government to take necessary actions such as raising taxes, reducing spending, or adjusting public borrowing rules to address the financial challenges, cautioning against entering office and claiming the situation is worse than expected.
