Rachel Reeves rules out 'tax and spend' ahead of spring statement

22 March 2025, 10:43

Rachel Reeves had ruled out “tax and spend” policies ahead of next week’s spring statement.

Rachel Reeves is under pressure to increase taxes or cut spending to meet the financial rules she set at the budget in October amid disappointing growth figures and higher-than-expected borrowing.

LBC understands the Chancellor has made up her mind not to raise taxes next week.

Speaking on Saturday, the Chancellor implied she would neither raise taxes nor Government budgets during next week’s fiscal event.

"We can't tax and spend our way to higher living standards and better public services,” she said.

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“That's not available in the world we live in today," the chancellor told the BBC.

The spring statement will be laid out by the Chancellor on Wednesday, but there’s not expected to be big tax and spend changes in there.

It comes after worse-than-expected public borrowing figures yesterday piled pressure on the Chancellor again in the run-up to the fiscal event.

The UK government borrowing rose by more than expected last month to £10.7billion – around £4billion more than was predicted – wiping out any headroom she may have had.

The Institute for Fiscal Studies warned the Chancellor was “boxed in” by her fiscal rules, and promised not to raise taxes further, or return to austerity for public finances.

She’s repeatedly insisted her promises to not borrow for funding day-to-day public spending and to get debt falling as a share of the UK economy by 2029-30 - are "non-negotiable".

Labour MPs have been piling pressure on her to rip them up rather than slash budgets.

But ministers are concerned that the squeeze on the finances is likely to mean even greater cuts to Whitehall departments when the spending review comes around later this year.