The internal criticism has been a source of frustration for the Treasury team.<\/p>\n
A Treasury source emphasised the risks of this approach, pointing out borrowing costs had risen to a 30-year high in Germany following Merz’s announcement.<\/p>\n
The chancellor is under great scrutiny ahead of her Spring Statement, against a backdrop of a stagnant economy.<\/p>\n
But those close to her believe her critics’ suggestions also deserve scrutiny – and are forcefully pushing back on what they regard as unrealistic solutions.<\/p>\n
If the UK followed the German example, No11 officials believe this could add \u00a34bn to borrowing costs \u2013 the budget of some entire departments \u2013 and would risk higher interest rates and mortgage payments.<\/p>\n
In other words, any hopes that some Labour MPs had that changes in the UK’s defence posture would unlock more borrowing have been very firmly dashed.<\/p>\n
And some Labour politicians \u2013 not on the left \u2013 who are worried about the forthcoming welfare cuts are complaining about a lack of Treasury engagement.<\/p>\n
Government sources point out that backbench MPs have been meeting the No10 policy team, and work and pensions ministers, who have listened to their questions and concerns.<\/p>\n<\/div>\n
\n
At ministerial level, there has also been some concern about the influence of the Office for Budget Responsibility \u2013 the umpire which decides if the government’s figures add up and if there is any ‘headroom’ in meeting fiscal rules.<\/p>\n
One source suggested that it has been given a “god-like” status, with its economic forecasts treated like tablets of stone.<\/p>\n
But Number 10 and Number 11 are both aware that any interference with this independent body would be politically toxic, inviting comparisons with Liz Truss, who ignored the OBR ahead of her disastrous mini-budget.<\/p>\n
Treasury sources point out they have already tweaked their fiscal rules – changing the definition of public debt- without provoking the ire of the OBR.<\/p>\n
And this has released billions more in borrowing for investment.<\/p>\n
The tensions beneath the surface in Labour probably won’t recede until the government makes more progress in its central mission of delivering economic growth, which would reduce the need for tax rises and spending cuts.<\/p>\n
Although just a snapshot, the January figures which show growth going in to reverse is politically (if not economically) significant, allowing opposition parties to push for a change of direction. <\/p>\n
Conservatives and the Lib Dems want the chancellor to ditch what they dub a jobs’ tax \u2013 the National Insurance increase on employers, which is being introduced next month.<\/p>\n
They argue this is holding back growth, but the chancellor won’t be for turning.<\/p>\n
In fact, her prescription for low or no growth is to go “further and faster” in implementing policies which have already been announced. <\/p>\n
That includes further deregulation and, following the abolition of NHS England, more arm’s-length bodies are in her sights.<\/p>\n
As Reeves’s officials pore over the economic graphs ahead of her Spring Statement, perhaps they could draw up a new chart.<\/p>\n
The one that demonstrates that economic growth and Labour dissent are in inverse proportion.<\/p>\n<\/div>\n\n\n
<\/div>\n<\/div>\n<\/figure>\n
Published at Fri, 14 Mar 2025 16:06:40 +0000<\/p>\n","protected":false},"excerpt":{"rendered":"
Reeves insists changes to welfare needed as MPs call for flexibility 4 hours ago Iain Watson PA Media Rachel Reeves has insisted on the need to “get a grip” on the welfare bill, saying the system is not working for the taxpayer or recipients. The chancellor’s comments come amid concerns from Labour MPs about the… Continue reading Reeves insists changes to welfare needed as MPs call for flexibility<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":3254,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-3253","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk-politics","entry"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/260web.com\/news\/wp-json\/wp\/v2\/posts\/3253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/260web.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/260web.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/260web.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/260web.com\/news\/wp-json\/wp\/v2\/comments?post=3253"}],"version-history":[{"count":0,"href":"https:\/\/260web.com\/news\/wp-json\/wp\/v2\/posts\/3253\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/260web.com\/news\/wp-json\/wp\/v2\/media\/3254"}],"wp:attachment":[{"href":"https:\/\/260web.com\/news\/wp-json\/wp\/v2\/media?parent=3253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/260web.com\/news\/wp-json\/wp\/v2\/categories?post=3253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/260web.com\/news\/wp-json\/wp\/v2\/tags?post=3253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}