Reeves cautioned over cuts before investment strategy

Rachel Reeves is gearing up for a major fight with trade unions who warn they will not stand by and allow a second age of austerity in the UK.

- DAVID MADDOX KATE DEVLIN

With serious concerns that the chancellor plans a severe squeeze on departmental budgets to balance the books, union bosses fear a new round of pay freezes and thousands of job losses.

In an ominous warning about a potential wave of strikes if pay demands are not met, one leading trade union leader, Steve Wright of the Fire Brigades Union (FBU), told The Independent: “Workers struggling to afford the basics will not accept falling living standards from Labour.”

Another senior trade union source at one of Britain’s largest trade unions also warned: “There’s a growing sense of tension, anger, despondency. The cuts that the government is talking about will affect workers and communities.

“If the government thinks it has resolved public sector pay with last year’s deal, then it’s a long way from reality and that pressure will continue to build. I wouldn’t say that workers will walk out immediately, but that pressure is not going away.”

The threats are a far cry from the early days of Sir Keir Starmer’s government after the election on 4 July last year when Labour ushered in bumper inflation-busting pay rises across the public sector.

Since then, a lack of economic growth, made worse by a decision to hike national insurance in the so-called jobs tax, has left Ms Reeves with very little room for manoeuvre when she delivers her spring statement today.

Already, Ms Reeves has said she intends to cut 10,000 civil service jobs and Sir Keir has announced plans to save £45bn by replacing workers with artificial intelligence.

But she and Sir Keir are now facing a trade union-led backlash, with support from left-wing Labour MPs calling for a new wealth tax instead of departmental cuts. It comes after growing anger over plans to slash benefits by £5bn, which will see more than one million people lose out.