Chancellor Rachel Reeves plans cuts to disability benefits to tackle Britain's debt crisis, sparking criticism and raising concerns about the UK's economic stability.
Chancellor Rachel Reeves is reportedly planning substantial cuts to disability benefits to address Britain's debt crisis. Downing Street reportedly believes significant reductions are necessary in the welfare budget, particularly with Personal Independence Payments (PIP). Following a sharp decline in the pound against the dollar and a rise in government borrowing rates to a 27-year high, warnings emerged that the escalating crisis could impact mortgage rates.
Reeves is said to be prioritizing spending reductions in unprotected departments over new tax increases. The annual cost of disability and health support payments is projected to increase from £22 billion to £35 billion by 2029. Meanwhile, former Treasury select committee chairman Harriet Baldwin criticized Reeves for traveling to China to meet with communist leaders while Britain's borrowing costs soared. Other politicians, including Liberal Democrats leader Ed Davey, called for Reeves to return to Parliament and address the crisis. In an unusual move, the Treasury issued a public statement reaffirming the Chancellor's commitment to her fiscal rules and maintaining control over public finances. Treasury officials revealed they are developing contingency plans for emergency spending cuts if a March forecast by the Office for Budget Responsibility indicates she is on track to breach her debt rules. Despite recent market turbulence, Treasury chief secretary Darren Jones downplayed its significance, attributing it to normal fluctuations in global financial markets. He also defended the Chancellor's trip to China as crucial for trade and investment. During her visit, the pound weakened to its lowest level since November 2023, prompting concerns about its stability. Yields on UK government bonds reached their highest levels in years, exacerbating the situation. Experts warned that investor confidence in the UK is waning and that the current economic climate resembles the crisis of 1976.
Politics DISABILITY BENEFITS DEBT CRISIS UK ECONOMY RACHEL REEVES BORROWING COSTS FINANCIAL MARKETS
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