Tax more, borrow more, ditch the OBR... other options open to Reeves

There is growing criticism of Rachel Reeves for her orthodox approach to managing the public finances. While it is clear that modest reductions in spending put forward in the spring statement cannot be described as a return to austerity, they are expected to deliver considerable harm to vulnerable people at a time when wealth inequality continues to rise.

- Phillip Inman

Critics also believe the chancellor's policies to improve living standards are flawed. Here we look at some of the options open to her.

Borrow more

Asking the international money markets to lend the UK more money was like a free lunch in the years after the 2008 financial crash. It is a tragedy that the chancellor from 2010, George Osborne, spurned this opportunity. These days, global lenders demand a much higher price from governments. Reeves will spend more than £100bn on debt financing in the next financial year on a budget of £1.2tn.

Economists have tried to define how much borrowing is too much and always failed, which leaves the financial markets to decide. Last year France was told by the ratings agencies, after it went over 110% of gross domestic product (GDP), that its credit rating would be downgraded. Paris is now on track to save €50bn from its 2025 budget. The UK, with a lower level of productivity than France and a more open economy susceptible to trade wars, seems to have hit the buffers when nearing the 100% debt-to-GDP ratio.

Tax more