Rachel Reeves has made tax rises inevitable
This Wednesday, Rachel Reeves will be in the firing line once again.
The event in question will not be a Budget, or even a mini-Budget, but rather a spending review. But such is the pressure on the public finances that the political and economic ramifications will be significant.
On the face of it, this review is meant to spell out the details of departmental spending within the overall totals that have already been set to 2028/29 for current day-to-day spending and to 2029/30 for capital spending.
Such reviews are not, therefore, meant to be the vehicle for announcing major changes in fiscal policy.
There is now supposedly only one major fiscal event for this purpose, namely the autumn Budget, with a subsidiary event, the Spring Statement, which was delivered in March.
That said, it would not come as a surprise if the Chancellor increased the spending totals on Wednesday.
After all, if defence spending is increased to 3pc of GDP (costing over £17bn per annum by 2029/30) and spending on health increases by 3.4pc in real terms per annum, this would imply that other departments would have to suffer an average real terms reduction in their budgets of 1.8pc per annum out to the end of the review period.
Good luck with selling that to the Labour Party.
Admittedly, although at one point increasing defence spending to 3pc of GDP was supposedly a 'commitment', more recently it seems to have been downgraded to an 'ambition'.
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