Who in their right mind would want to be Rachel Reeves right now? Her spending review out next week will feel like austerity all over again. Even if, in reality, it’s not a cut but more spending, as the Institute for Fiscal Studies emphasises. After an uplift in everyday spending at the budget, here comes a much-needed capital slab of £113bn. Yet whatever the numbers say, painful cuts to most things will be the story and the feeling.
If you want to try your hand, the IFS has just put its “Be the Chancellor” gadget up on its site. Strap yourself into Reeves’s fiscal straitjacket and attempt a Houdini-like escape, as you decide on levels of borrowing, taxing, spending and debt. One thing it illuminates is how much even mere slivers of growth improve your position immensely. How far can you go? The febrile market meltdown point is unknowable, but Liz Truss was a useful crash dummy testing squillions on tax cuts without raising revenue. Donald Trump, plunging into an unexplored fiscal wilderness, beat a retreat when his monster tariffs sent the markets charging back out at him. He seems to be having another try.
