New UK government cuts billions of pounds of spending to fix ‘unsustainable’ finances
- Labour government blames Conservative administration for US$28 billion overspend; finance minister Rachel Reeves hints at future tax rises
Britain’s new finance minister, Rachel Reeves, told parliament on Monday her Conservative predecessor had left public spending on track to go over budget by £21.9 billion (US$28 billion) this year and announced an immediate £5.5 billion (US$7 billion) of cuts.
Reeves pencilled in a further £8.1 billion (US$10.4 billion) of cuts for the next financial year and promised more measures at a full budget on October 30, when the newly elected Labour government would need to make “difficult decisions”, including on tax.
Part of the cost comes from Reeves’ decision to give public-sector workers pay rises costing in total £9.1 billion, following recommendations from independent pay-setting bodies which she said the Conservatives had ignored for too long.
Reeves said the state of the public finances was not sustainable, and posed a risk to economic stability if left unchecked.
“It therefore falls to us to take the difficult decisions now to make further in-year savings,” she told parliament.
Elected to run the world’s sixth-largest economy in a landslide victory on July 4, Labour has spent much of its first three weeks in power telling voters that things are worse than expected in almost every area of public policy.
