The Treasury will be “ruthless” in implementing public spending cuts to adhere to the government’s fiscal rules in this summer’s spending review, Prime Minister Keir Starmer has announced.
Despite prior commitments to avoid austerity, Starmer’s endorsement of stringent financial measures underscores the mounting pressure to stabilize the UK economy.
On Monday, Starmer affirmed that Chancellor Rachel Reeves was “absolutely right” to adopt a firm stance on public spending after a turbulent week marked by rising government borrowing costs and a depreciating pound.
He expressed unwavering confidence in Reeves, commending her for doing a “fantastic job” amidst internal concerns from some Labour MPs about the economic recovery strategy.
At the launch of the government’s artificial intelligence action plan in East London, Starmer acknowledged the complexity of reviving the economy after more than a decade under Conservative leadership.
“We never pretended, nor would anybody sensibly argue, that after 14 years of failure you can turn around our economy and public services before Christmas. Before the election, I said it is not going to be possible to do this in six months. It’s going to take time.”
Keir Starmer
Fiscal Rules to Guide Tough Decisions
Addressing reporters’ questions about Reeves’ potential to impose deeper cuts to public services to mend government finances, Starmer confirmed the intention to be “ruthless” in decision-making. “We have got clear fiscal rules, and we are going to keep to those fiscal rules, and that’s why the chancellor was absolutely right in the words that she chose to describe the approach that we will take,” he explained.
Government insiders revealed that Reeves is prepared to implement more substantial departmental spending reductions than initially planned, having ruled out additional borrowing or tax increases. Any emergency measures to prevent breaching her fiscal rules could be unveiled in a spring statement.
“Rachel Reeves is doing a fantastic job. She has my full confidence. She has the full confidence of the entire party. She was given an incredibly challenging job at the budget. She took tough decisions. She was right to take the tough decisions.”
Keir Starmer
However, he avoided confirming whether Reeves would remain chancellor by the end of the current parliamentary term.

Concerns are growing among some ministers that the government’s fiscal rules, which preclude further tax hikes or borrowing, may leave little room for maneuvering. Starmer maintained the necessity of adhering to these rules to ensure economic stability.
Emphasizing the government’s focus on economic growth, Starmer asserted, “Economic growth is our No 1 priority. We’ve said that throughout, and all of the other work we’re doing ladders up to this.” He highlighted that adjustments to planning regulations, the industrial strategy, and the adoption of artificial intelligence would be pivotal in driving growth.
Nevertheless, Starmer acknowledged the importance of sticking to fiscal rules, “We do have in place fiscal rules, which we will absolutely stick to, because they are necessary to provide the stability that we want.”
He also pointed out that public service reform had not been sufficiently leveraged as a means of economic improvement, suggesting this “lever” needed to be pulled “hard and quickly” by his administration.
Downing Street officials have attempted to assuage fears of austerity, asserting that any new spending cuts would not reach levels associated with past austerity measures. Reeves and Starmer have both categorically ruled out returning to such policies.
However, the opposition remains skeptical as Gareth Davies, the shadow financial secretary, criticized the government’s approach.
“Labour are trying to insist that everything is fine, but the fact that Keir Starmer has repeatedly refused to say whether Rachel Reeves will remain as chancellor speaks volumes. The markets and businesses are watching, Labour promised stability and confidence but they have lost control. They must take action to reverse before this gets worse for families.”
Gareth Davies
As such, the UK government is embracing spending cuts to stabilize an economy plagued with high cost of government borrowing and depreciating pound.
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