(Bloomberg) — UK Chancellor Rachel Reeves will promise in a speech on Monday to “fix the foundations” of the British economy as she seeks to expose the spending squeeze she inherited.
Most Read from Bloomberg
Reeves will accuse the previous administration, led by Rishi Sunak and Jeremy Hunt, of “covering up the true state of the public finances” by overseeing a near £20 billion ($26 billion) shortfall for public services. She’ll announce the establishment of a new “office of value for money” to clamp down on wasteful public spending, including the non-essential hiring of external consultants.
“Before the election, I said we would face the worst inheritance since the Second World War,” Reeves will tell Parliament on Monday afternoon, according to excerpts provided by the Treasury. “But upon my arrival at the Treasury three weeks ago, it became clear that there were things I did not know.”
She will say “it is time to level with the public and tell them the truth.”
The speech will seek to carve a narrative that Prime Minister Keir Starmer’s newly elected Labour government was handed a dire fiscal situation by the Tories in areas from housing and prisons to health and migration. It lays the groundwork for Reeves to attempt to pin any future spending squeezes or tax rises on her predecessors.
Bloomberg Economics concurs that some £20 billion needs to be found by 2028-29 to prevent spending cuts in unprotected departments such as justice and local government, saying pressures on defense, public sector pay and welfare make “more tax hikes look inevitable.”
Britain’s independent pay review bodies have recommended salary increases of 5.5% for teachers and National Health Service staff, compared with increases of 3% that the government had previously budgeted.
Any changes to Britain’s tax rate will have to wait until the autumn budget. Reeves will confirm that she’s commissioned the Office for Budget Responsibility to produce a budget forecast, and she’ll announce the date for the fiscal statement on Monday. She will also commit to holding only one major fiscal event a year, rather than two as has been the case in recent years.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
From: Yahoo.com
Financial News
