Chancellor Rachel Reeves is planning to cut government budgets this spring. Reports say she might reduce some department budgets by up to 11%. This is because the government is trying to stick to its financial rules while dealing with high borrowing costs and lower-than-expected economic growth. These issues have wiped out the £9.9 billion cushion she created in her October Budget, which included tax increases.
The Treasury has asked some departments to prepare for possible budget cuts ahead of a spending review in June.
At the same time, Prime Minister Keir Starmer is under pressure to outline a plan to increase defence spending to 2.5% of the economy. Currently, the UK spends about 2.3% of its national income on defence.
Reeves has faced criticism for raising taxes by £40 billion in her first Budget. A recent poll showed that half of Britons feel less confident about economic growth because of her decisions. Additionally, two-thirds of people disagree with her decision to remove winter fuel payments for millions of pensioners.
Last week, Reeves defended her actions, saying it’s impossible to fix over a decade of poor economic performance in just a few months. She emphasized the need for stability and reforms to encourage investment, which she called the “lifeblood of a successful economy.” She also said the government must act faster to improve growth and help working people.
