THE Chancellor has been put on notice to cut spending in her Budget to help tackle Britain’s mounting debt.
Rachel Reeves was told by City analysts she must reduce Whitehall expenditure to help plug the country’s financial black hole.
Chancellor Rachel Reeves has been put on notice to cut spending in her Budget to help tackle Britain’s mounting debt[/caption]
Ms Reeves has given herself three months until the Budget to kick-start growth after yesterday admitting the economy is ‘not working well’[/caption]
Their warning came as sterling rose slightly against the dollar after plummeting on Tuesday.
There is mounting speculation Ms Reeves may resort to tax hikes to raise up to £51billion during the Budget, announced yesterday to take place at the end of November.
But economist Julian Jessop, from the Institute of Economic Affairs, last night said that the Chancellor needs to look towards spending cuts to stabilise the pound.
He said: “It would be madness to rely solely on tax hikes to fill the black hole in the public finances.
“At the bare minimum, international investors will want the Government to find new savings on welfare spending to replace the £6billion lost from the U-turns on working-age benefits and winter fuel payments.”
Experts at Deutsche Bank insisted the pound would “react positively” to action such as tax hikes or cost-cutting.
Borrowing costs for the Government hit 27-year highs this week as concerns grow over how the Chancellor will plug the gap.
Ms Reeves has given herself three months until the Budget to kick-start growth after yesterday admitting the economy is “not working well”.
She will set out a series of measures to curb inflation and borrowing costs — and promised that she would keep a “tight grip” on spending to avoid market turmoil.
But Shadow Business Secretary Andrew Griffith said: “Only by serious spending cuts can the out-of-her-depth Chancellor now restore any stability to the pound.”