UK’s Reeves announces £5.5b budget cuts

Britain’s new finance minister, Rachel Reeves, has unveiled plans for immediate budget cuts totaling £5.5 billion, citing her Conservative predecessor’s fiscal mismanagement.

Reeves revealed that public spending was projected to exceed the budget by £21.9 billion ($28 billion) this year and outlined further reductions of £8.1 billion for the next financial year.

The cuts come alongside a £9.1 billion increase in public-sector wages, following long-overlooked recommendations from pay-setting bodies. Reeves stressed the unsustainable state of public finances and the need for “difficult decisions” to maintain economic stability.

Reeves also announced a review of government projects, including roadbuilding and hospital redevelopment, and plans to save £1.5 billion annually by cutting heating payments for higher-income pensioners.

Despite inheriting a high tax burden and sluggish growth, Reeves vowed not to raise income tax or VAT rates, with more details to come in a full budget announcement on October 30.

Critics, including former finance minister Jeremy Hunt, have accused Reeves of using the budget crisis as a pretext for future tax increases, while the Institute for Fiscal Studies and the Office for Budget Responsibility have called for a review of the previous government’s budget preparations.

Attribution: Reuters.