Britain: The country is bankrupt and broken, Starmer says

Britain’s new Chancellor of the Exchequer, Rachel Reeves, will on Monday accuse the previous Conservative government of committing billions of pounds of spending that were not properly budgeted. Labour, elected to run the world’s sixth-largest economy in a landslide victory on July 4, has spent much of its first three weeks telling the public that things are worse than expected in almost every area of ​​public policy.

When Reeves was finance minister, she ordered officials to prepare a new assessment of public finance needs, which she will present to Parliament on Monday and use to prepare for her first formal budget statement later this year.

Labour sources said on Friday the assessment found a deficit of around £20 billion, and Prime Minister Keir Starmer’s office said on Saturday it would “show Britain is broke and broken.” The deficit may be larger than the IMF has advised.

The Treasury said late on Sunday that the review would show that “the previous government overspent this year’s budgets by billions of pounds after making a series of unfunded promises”.

Rachel Reeves is expected to announce cuts to public spending.

The Treasury said Reeves would also announce the creation of a new office of value for money, crack down on government waste, reduce the use of external consultants and sell off unused government property.

In her planned speech to parliament, Reeves will say: “The previous government refused to take the tough decisions. They covered up the real state of the public finances. Then they put it on their feet.”

The British Conservatives have dismissed the accusations as an excuse for Labour to raise taxes, after the centre-left party ruled out raising income tax, VAT and other key taxes during the election campaign.

The March budget forecast was signed off by the Independent Office for Budget Responsibility, despite widespread reports of funding problems in areas such as prisons and healthcare.

“Rachel Reeves is trying to trick the British public into accepting Labour’s tax rises. She wants to pretend that the Office for Budget Responsibility, whose forecasts have been used in all recent Conservative government budgets, doesn’t exist,” said Gareth Davies, a Conservative MP who speaks for the party on fiscal policy.

Source: Reuters