Britain’s government will stick to its fiscal rules despite global upheaval, finance minister Rachel Reeves said on Sunday, raising the prospect of belt-tightening measures to meet her targets for the public finances in a budget update this week.
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In her first full budget last October, Reeves sought to win the trust of investors by pledging to bring day-to-day spending into balance with tax revenue by the end of the decade.
But she is believed to have been knocked off course by slow economic growth and higher borrowing costs. A potential global trade war triggered by US President Donald Trump’s import tariffs has led to downgrades to the international outlook.
“The world has changed. We can all see that before our eyes and governments are not inactive in that,” Reeves said. “We’ll respond to the change and continue to meet our fiscal rules.”
On Friday, British debt costs jumped after higher-than-expected borrowing figures, showing nervousness among investors about the ability of Prime Minister Keir Starmer’s government to fix the public finances with the economy stuck in a slow gear.
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Last week, the government announced cuts to welfare spending to save around 5 billion pounds (US$6.5 billion) a year, angering some lawmakers in Starmer’s centre-left Labour Party.
Reeves is expected to announce further measures in her Spring Statement on Wednesday to restore her 10 billion pounds of room for manoeuvre to meet her fiscal targets.