Britain’s Labour government plans to cut spending on welfare by billions of pounds, local media reported on Wednesday, with public finances worsened by a stagnant economy and elevated borrowing costs.
Finance minister Rachel Reeves will announce the cuts in her Spring Statement on March 26, a follow-up to her inaugural budget last Oct. 7, according to the Financial Times and other U.K. publications.
The FT added that a £9.9 billion (US$12.7 billion) fiscal cushion had been wiped out in recent months.
U.K. government bonds shot higher after Reeves unveiled business tax rises in her budget that followed Labour’s election victory last year.
Sky News said the Treasury on Wednesday was informing the independent Office of Budget Responsibility of its proposed cuts to welfare and other departments.
“We do not comment on speculation,” a spokesperson at the Department for Work and Pensions said in reaction.
They noted, however, that the government was “bringing forward reforms to health and disability benefits … so sick and disabled people are genuinely supported back into work, while being fairer on the taxpayer.”
Prime Minister Keir Starmer last week pledged to boost U.K. defence spending to 2.5 per cent of the nation’s economy by 2027 in the face of uncertainty over the U.S.’s commitment to Ukraine and NATO.
