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Home » Rachel Reeves Reduces UK Expenditure by Billions, Citing Global Economic Challenges
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Rachel Reeves Reduces UK Expenditure by Billions, Citing Global Economic Challenges

By adminMar. 26, 2025No Comments4 Mins Read
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Rachel Reeves Reduces UK Expenditure by Billions, Citing Global Economic Challenges
Rachel Reeves Reduces UK Expenditure by Billions, Citing Global Economic Challenges
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Britain’s Chancellor of the Exchequer, Rachel Reeves, to Slash UK Government Spending by Billions Due to Global Economic Headwinds

Britain’s Chancellor of the Exchequer, Rachel Reeves, will slash UK government spending by billions of pounds due to tough decisions blamed on global economic headwinds.

In her spring statement on Wednesday, Reeves is expected to defend spending cuts as painful but essential to safeguard Britain’s future in a global economy that is changing fast. According to excerpts released by the Treasury, Reeves will say:

“Our task is to secure Britain’s future in a world that is changing before our eyes. The job of a responsible government is not simply to watch this change.”

The Treasury says it will save about £10 billion ($13 billion) daily from government spending. However, a full breakdown of these cuts will be detailed in a multi-year spending review in June.

Reeves Under Fire as Economic Challenges Mount

Since her last budget in October, Reeves has also been grappling with an additional £17 billion in borrowing requirements. She has already saved £5 billion by cutting welfare benefits.

Her approach has drawn scorn from within the Labour Party, with some fearing that the spending cuts will resemble the austerity imposed by the Conservative-led government after 2010. She also faces opposition from Conservative critics who hold her responsible for the UK’s economic struggles.

In January, the country found itself at the heart of a global bond market rout as fears of “stagflation” — a combination of stubbornly high inflation and stagnant growth—gripped investors.

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Critics argue that Reeves’ tax- and spending-heavy budget, along with Bleeker’s view of public finances, have shaken business and investor confidence.

Tory Shadow Chancellor Mel Stride condemned Reeves’ comments as an attempt to blame others, arguing that her policies had been responsible for economic stagnation and increased government borrowing.

He noted that the chancellor needs to take responsibility for her own choices. Tory added that economic stagnation and higher government borrowing could not be blamed on external factors.

He further noted that the country had been on this trajectory since her first “disastrous” budget.

Labour Party Faces Internal Struggle Over Spending Cuts

The planned cuts have alarmed Labour MPs and cabinet ministers. Others argue that Reeves should relax her fiscal rules or raise taxes instead.

There is also deepening disquiet over reforms to disability benefits, which has prompted dissent within the party.

To counter, Reeves will tout that she has rebuilt the £9.9 billion budget headroom that was wiped by soaring borrowing costs and softer economic growth.

The government is also trying to cut operational costs by 15%, which could result in about 10,000 civil service job losses. The deepest cuts are expected from departments other than health, defense, and education. Ministers at these unprotected departments are expected to rebel as the row over spending cuts deepens.

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The government’s independent fiscal watchdog, the Office for Budget Responsibility, will publish its new forecast for the UK economy. Growth in 2025 is tipped to be cut from 2% to 1%.

Reeves Blames Global Forces for the UK’s Economic Woes

Reeves blames the UK’s growing debt outlay on elevating global borrowing costs. She also indirectly alludes to the re-election of US President Donald Trump, whose approach to tariffs and Russia’s war in Ukraine has led European leaders to reassess their trade models and devote more to defense.

The UK is currently negotiating an economic side deal with the US to lessen the blow from Trump’s proposed tariffs, possibly by adjusting the UK’s digital services tax, which targets American tech companies.

One of the few increases in spending in Reeves’ plan is a £2.2 billion boost in defense—funded in part by redirecting foreign aid. This enables her to remain within her rules on the public finances because capital expenditure does not count towards her most important fiscal target.

Despite these steps, Reeves has been drawing fire from the public. A recent YouGov survey found that 73% of Britons believe the government is failing to manage the economy, with just 16% saying it is doing a good job.

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