If a Labour chancellor has to start cutting, keep calm. It’s not a betrayal
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After Macron’s bruising failure to expand spending in France, unions need to realise that Rachel Reeves may have no choice but to dial back. The prospect of a tough public sector spending review this year will cause alarm on Labour’s backbenches and an angry response from many inside the big public sector unions.
Britain could be plunged back into months of industrial action if public spending cuts include restrictions on pay. Worse, the government could come under pressure from its own MPs, wrecking Keir Starmer’s claim of providing the stability and solidity missing from UK politics since 2010.
The message must be to all those that claim to support the government: stay calm and recognise that the UK is in a hole from which it will take years to emerge. Trade unions, in particular, need to dial down the rhetoric of betrayal should Rachel Reeves need to take a scalpel to departmental spending and delay eagerly awaited projects until she has the money to pay for them.
As looks increasingly likely, she will not have the funds this year after a dramatic slowdown in economic growth, more persistent inflation than was expected and a rise in borrowing costs. The Treasury’s independent forecaster, the Office for Budget Responsibility (OBR), could say in its March review that all of Reeves’s financial buffer, set aside in the October budget as a cushion against a negative turn of events, has been eaten up, forcing the chancellor to revise her spending priorities.
