LONDON – British finance minister Rachel Reeves reaffirmed her commitment to fiscal rules on Sunday despite global economic uncertainty, hinting at potential spending cuts to achieve her financial targets in an upcoming budget update.
In her initial full budget last October, Reeves sought to reassure investors by pledging to balance day-to-day spending with tax revenue by the end of the decade. However, this goal has been complicated by slower-than-expected economic growth and rising borrowing costs.
The global outlook has also deteriorated due to a potential trade war sparked by U.S. President Donald Trump’s import tariffs. Reeves acknowledged the shifting economic landscape, stating, “The world has changed. We can all see that before our eyes, and governments are not inactive in that. We’ll respond to the change and continue to meet our fiscal rules.”
When asked about the possibility of spending cuts in her Spring Statement on Wednesday, Reeves confirmed that public spending is projected to rise above inflation each year until the end of the current parliament in 2029. However, she emphasized the importance of prioritizing where government funds are allocated.
“As a government, we have to decide where that money is spent, and we want to spend it on our priorities,” Reeves said. She also mentioned that the government could reduce 10,000 public sector jobs as part of its cost-cutting strategy.
A cabinet office source revealed on Saturday that Reeves is considering departmental spending cuts to save over £2 billion (US$2.58 billion) annually by the end of the decade. Reeves defended the potential civil service reductions, saying, “During Covid, there were big increases in the number of people who were working in the civil service. That was the right thing to do… But, it’s not right that we just keep those numbers there forever.”
As economic headwinds persist, Reeves aims to balance fiscal responsibility with strategic public spending, underscoring the government’s commitment to financial stability.