Published 18:57 IST, July 28th 2024
Britain in financial crisis, says new government
Finance Minister Rachel Reeves will accuse the Conservatives in Parliament of making unfunded spending commitments over 14 years to win public favour.

Broke Britain: The newly-elected Labour government has declared Britain "broke and broken" as it prepares to assess public finances on Monday. Labour, which won a landslide victory on July 4, blames the previous Conservative administration for a £20 billion ($26 billion) shortfall.
Finance Minister Rachel Reeves will present a fiscal review to Parliament, accusing the Conservatives of making unfunded spending commitments over their 14-year tenure to win public favour.
"The assessment will reveal the economic and public service turmoil caused by populist politics," stated Prime Minister Keir Starmer's office. “The previous government made significant financial promises without securing the necessary funds.”
Conservatives deny crisis
The Conservatives dismissed Labour's claims of a financial 'black hole' as an excuse for potential tax hikes not disclosed during the campaign. Some economists also expressed scepticism, suggesting Labour should have anticipated these issues before taking office.
Reeves will announce her first budget date, commission independent forecasts, and outline the spending review process. She is expected to approve above-inflation pay raises for teachers and health workers.
Labour's approach to addressing the financial shortfall remains unclear, constrained by campaign promises not to raise income tax, National Insurance, VAT, or corporation tax rates. Media reports suggest Reeves might hint at other tax increases and delay infrastructure projects in her statement.
Senior Labour minister Pat McFadden emphasised, “We will not shy away from being honest with the public about the reality of what we have inherited."
(With Reuters Inputs)
Updated 18:57 IST, July 28th 2024