Britain's government has declared the country to be in a state of 'broke and broken' ahead of a Monday assessment of public finances. This assessment will be used by the newly-elected Labour Party to attribute a 20 billion pound ($26 billion) shortfall to their predecessors.
Having won a landslide victory on July 4 to govern the world's sixth-largest economy, Labour has spent its first three weeks emphasizing that conditions are worse than anticipated across nearly all public policy areas. Finance Minister Rachel Reeves is set to outline the results of a fiscal review in Parliament, accusing the Conservative Party, which led the country for the past 14 years, of making unfunded spending commitments to gain public support.
A statement from Prime Minister Keir Starmer's office asserts, 'The assessment will show that Britain is broke and broken - revealing the mess that populist politics has made of the economy and public services.' It further claims that the previous government made significant funding commitments for the current financial year without clear funding sources.
The Conservatives have rejected Labour's pre-announced revelation of a 'black hole' in public finances as a contrived excuse for undisclosed tax increases during the election campaign. Some economists are skeptical, suggesting there were few surprises Labour could not have anticipated before taking office. Reeves will also announce the date for her first budget, commission independent forecasts to be published alongside it, and outline plans for the formal spending review process.
She is also expected to approve pay raises for teachers and health workers above the inflation rate. It remains unclear how Labour plans to address the identified shortfall, given Reeves' election promises not to increase income tax, National Insurance, value-added tax, and corporation tax rates. Media reports suggest Reeves might use Monday's statement to lay the groundwork for other tax increases in the subsequent budget, and the Financial Times reports she may delay certain road and hospital construction projects.
The government statement did not specify any measures, but senior Labour minister Pat McFadden assured, 'We will not shy away from being honest with the public about the reality of what we have inherited.'
