After unpopular tax hikes in the autumn, the UK government is now turning to painful budget cuts in an attempt to stabilize the economy. On Wednesday, Finance Minister Rachel Reeves announced plans to save £14 billion annually by the end of the decade, aiming to balance the country’s finances.
Reeves blamed global uncertainty for the UK’s poor economic outlook during a highly anticipated budget speech in Parliament. The Office for Budget Responsibility (OBR) revised its growth forecast for 2025 to 1%, down from the 2% predicted last October.
The cuts will target public spending, disability and health benefits, and government operations. Around £5 billion will be cut from support for the disabled and sick, public services will face £6.1 billion in reductions, and the central government’s operating costs will be slashed by 15%, leading to the loss of 10,000 civil service jobs.
The Labour government, led by Prime Minister Keir Starmer, also faces pressure from high borrowing costs, increased military spending, and the threat of a trade war with Donald Trump. Despite criticism from the opposition and within her own party, Reeves defended the measures, saying they will permanently boost the UK’s GDP through structural reforms, including easing restrictive planning regulations.
Market reaction remained calm as most details had been leaked beforehand. However, Labour MP Debbie Abrahams warned that cuts to health and disability benefits would increase poverty and worsen public health conditions. Thomas Lawson, head of the disability charity Turn2us, criticized the cuts, saying they unfairly target the most vulnerable.
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Reeves’ budget plan follows a controversial decision last autumn to increase employer contributions and borrow heavily to stimulate growth. The government has tried to soften the blow by increasing funding for the struggling NHS and introducing labour reforms aimed at improving workers’ rights.
Despite these efforts, analysts predict more tough decisions ahead. Paul Dales of Capital Economics described Reeves’ strategy as “budget patchwork,” warning that rising defense costs and market pressure could force further tax increases and spending cuts in future budgets.
This article is originally published on .la-croix.com
