UK Finance Minister Stays Committed to Fiscal Rules Amid Global Uncertainty

UK Finance Minister Rachel Reeves has reaffirmed her commitment to fiscal rules despite global economic challenges. With her upcoming budget update, the government may introduce austerity measures to meet financial targets.

Reeves remains committed to fiscal rules despite global economic challenges

Sticking to Fiscal Goals

In a statement on March 23, Reeves emphasized that the government would continue to adhere to its fiscal rules. These rules aim to balance day-to-day spending with tax revenue by the end of the decade, a goal she first announced in her full budget last October. Despite global economic slowdowns, rising borrowing costs, and potential disruptions from trade tensions, Reeves is determined to maintain this fiscal discipline.

Prioritizing Spending

Although public spending is expected to rise above inflation, Reeves stressed the need for strategic prioritization. The government plans to focus its spending on key areas that align with its long-term goals. This approach comes at a time when global economic conditions, including slower growth and higher borrowing costs, have put pressure on financial targets.

Cutting Civil Service Costs

To save £2 billion annually, Reeves proposed reducing civil service costs by 15% by 2030, potentially cutting 10,000 jobs. This move aims to reverse Covid-era staffing increases.

Managing US Trade Relations

Reeves clarified that the UK is not a target for US trade concerns, but is working to avoid the impact of potential tariffs. Talks with the US are ongoing about the Digital Services Tax and broader trade issues.

Looking Forward

As the government prepares for its Spring Statement, Reeves remains focused on fiscal discipline while navigating global challenges and prioritizing key spending areas.