Rachel Reeves faces immense pressure to navigate a £30 billion shortfall in government finances brought about by recent welfare reforms and a struggling economic outlook. The failure to maintain fiscal rules, coupled with rising interest rates and an impending downgrade in productivity forecasts, has put her plans under scrutiny. Economists warn that financial markets may react negatively to any increase in borrowing. She has limited options, including potentially breaking fiscal rules or cutting spending, both of which carry significant risks and challenges given the current economic climate.
Rachel Reeves faces pressure to address a multibillion-pound shortfall in government finances, amid challenges posed by a sluggish economic outlook and high-stakes welfare changes.
Economists at Deutsche Bank forecast a potential £30 billion shortfall for Reeves, raising concerns about the sustainability of her self-imposed fiscal rules.
Reeves insists her fiscal rules are iron-clad and non-negotiable, yet significant headwinds make compliance increasingly challenging amid higher borrowing costs.
The possibility of cutting spending has emerged due to the significant financial pressure following the government’s welfare U-turns and the impact on its budget planning.
Collection
[
|
...
]