Chancellor Rachel Reeves has come under fire for allegedly using questionable figures in her spending review, after failing to explain how government departments would achieve planned savings clearly.
Paul Johnson, director of the Institute for Fiscal Studies (IFS), criticised the lack of transparency, stating that his organisation could not identify any specific areas, aside from overseas aid, where spending reductions were explicitly planned. This follows Reeves’ claim that the Treasury had conducted a detailed, line-by-line “zero-based” review of each department’s budget.
However, Johnson noted that nearly all departments were set to face identical cuts of 10% in their administration budgets over the next three years, followed by a further 5% in 2029–30, regardless of whether overall spending in those departments was set to rise.
“That is not the result of a serious department-by-department analysis,” Johnson said during the IFS’s review of the Chancellor’s plans. With a visible shrug, he added, “I hesitate to accuse the Treasury of making up numbers, but…”
He also warned that Reeves was only managing to stay within her fiscal rules, “by a gnat’s whisker,” and cautioned that even minor negative shifts could lead to further tax increases.
The remarks add to mounting pressure on the Chancellor, coming on the same day that official data confirmed a contraction in the UK economy at the start of the second quarter.
UK economy shrinks 0.3% in ‘Awful April’ amid tax hikes and trade disruption
The UK economy contracted by 0.3% in April, marking the sharpest monthly decline since October 2023, according to new data from the Office for National Statistics (ONS).
The drop was steeper than the 0.1% contraction forecast by analysts and follows a 0.7% expansion in the first quarter of the year.
April’s decline came as businesses contended with a rise in National Insurance contributions and an increase in the minimum wage, introduced under Chancellor Rachel Reeves. The downturn also coincided with the introduction of former US President Donald Trump’s “liberation day” tariffs, which triggered a record £2 billion slump in UK exports to the US.
Suren Thiru, economics director at the ICAEW, described the latest figures as a sharp warning sign. “These figures suggest that the UK’s economic fortunes took a notable nosedive in ‘Awful April’ as skyrocketing bills and tax rises, coupled with the chaos over US tariffs, suffocated overall output.”
He added: “April’s decline is probably the start of a more sobering period for the UK economy, with the damage from spiralling costs and intensifying global uncertainty set to slow growth sharply this quarter, despite elevated government spending.”
