PA
Rachel Reeves has warned that the UK faces a £100 billion black hole in the public finances over the next five years as she prepares to deliver her first budget as chancellor.
At a meeting of the political cabinet, the chancellor said the £22 billion gap this year – which the government has blamed on their poor economic inheritance from the Tories – would be a recurring cost each year of this parliament.
A Labour spokesperson said the scale of inheritance meant there would have to be “difficult decisions on spending, welfare, and tax” – and that the long-term priority had to be unlocking private sector investment to drive economic growth.
Nearly 38,000 UK jobs are set to be created across the UK after a total of £63 billion of investment was announced around Monday’s International Investment Summit.
The record-breaking total figure more than doubles the £29.5 billion committed at last year’s Global Investment Summit and spans partnerships across the infrastructure and tech sectors, including over a billion pounds in new investments announced today by DP World, Associated British Ports (ABP) and Imperial College London.
But there is likely to be more short-term pain for long-term gain before the books get balanced.
Treasury sources say the £22 billion sum was a conservative estimate of the amount of money needed to cover the cost of areas including public sector pay, support for Ukraine and the asylum system..
The downbeat assessment came with a warning that “this is not a budget for rabbits”, with government aides trying to manage expectations of what the chancellor will be able to deliver in her long-awaited first fiscal statement.
Instead, the budget will be presented as a longer-term down payment on “fixing the foundations” of the country, as the government uses all the levers at its disposal to grow the economy.
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