Chancellor Rachel Reeves has vowed to address the economic challenges left behind by the previous Conservative government, as reports circulate about a potential £20 billion deficit in the public finances. Reeves, who is currently attending the G20 summit in Brazil, stated in an interview with broadcasters that she intends to showcase the UK’s readiness for business and attract private investment into the economy.
In anticipation of her upcoming speech on Monday regarding the state of the UK’s finances, Reeves was questioned about the reported £20 billion deficit. She acknowledged the magnitude of the situation and affirmed that the Conservative government was responsible for creating this “mess.” However, she assured that she and her team are committed to fixing it.
Meanwhile, Paul Johnson, the director of the independent Institute for Fiscal Studies (IFS), shared his insights on the potential solutions to the deficit. He pointed out that reversing the National Insurance cuts introduced by former Health Secretary Jeremy Hunt earlier this year could significantly alleviate the problem. However, with Labour ruling out any increases to National Insurance or income tax, Johnson suggested that the government may have to resort to more complex tax changes, such as those pertaining to capital gains and inheritance.
On the topic of the new government’s previous claims of not knowing the full extent of the economic issues prior to their election, Johnson expressed his belief that they were well aware of the challenges they would face in terms of public services. However, he acknowledged that there may have been specific details that they were not aware of and that the situation could potentially be worse than expected.
In response to Reeves’ statements, Shadow Chancellor Jeremy Hunt dismissed her claims of the economy being in a worse state than anticipated as “nothing but a fabrication.” He criticized her reluctance to make difficult decisions regarding pay, productivity, and welfare reform, which could have helped the country stay within its means. Hunt also accused Reeves of laying the groundwork for potential tax increases.
The situation continues to develop as Reeves prepares to deliver her speech on Monday and the government faces the daunting task of addressing the £20 billion deficit. Stay tuned for further updates on this developing story.
