Gloomy mood within Labour as promised growth remains elusivepublished at 14:06 Greenwich Mean Time 14 January
Iain Watson
Political correspondent
The Treasury hopes that once President-elect Trump is
inaugurated next week, and there is clarity – for better or worse – over tariffs and
the linked effects on inflation, then turmoil on the international markets will replaced by
relative calm – and borrowing costs eased.
If, however, those costs remain high, government sources are
clear that spending will be squeezed rather than taxes raised.
Substantial cuts to the welfare budget will be just one
screw that will tightened on public spending.
The wider question is whether Rachel Reeves’s party has the
stomach for this.
There has been something of a frenzy in some sections of the
press over whether Reeves can hold on to her job.
There is no sign of any organised move inside Labour’s
parliamentary party to oust the chancellor.
But the mood remains gloomy – in part, because of poor polls
ratings and in part because promised growth -the government’s “number one priority” – remains elusive.
The independent Office for Budget Responsibility is due to
deliver a new economic forecast in March.
And if downgrades growth prospects, the mood could darken
further.
