in her first fiscal statement as Chancellor, Racel Reeves has painted a challenging picture of the UK’s public finances, revealing significant overspending and outlining plans to address what she calls an “unforgiveable” inheritance from the previous government.

Speaking to the House of Commons on July 29, Reeves disclosed a projected overspend of £22bn in the current financial year, far exceeding previous estimates.

The Chancellor highlighted several areas of concern, including a £6.4bn overspend on the asylum system, £2.9bn on rail services, and £9bn on public sector pay awards.

Paul Johnson, Director of the Institute for Fiscal Studies (IFS), commented that while some pressures were predictable, “the extent of the in-year funding pressures does genuinely appear to be greater than could be discerned from the outside.”

To address these challenges, Reeves announced a series of immediate actions. All government departments have been asked to find savings totalling at least £3bn. Several unfunded projects, including the “Advanced British Standard” qualification and certain transport initiatives, have been cancelled.

The Chancellor also announced a “complete reset” of the New Hospitals Programme, promising a “thorough, realistic and costed timetable for delivery.”

Perhaps most significantly for businesses, Reeves reaffirmed the government’s commitment not to increase National Insurance, Income Tax, or VAT. However, she also promised a clampdown on tax avoidance, signalling potential changes that could affect corporate tax strategies

A key date for businesses to mark in their calendars is October 30th, when Ms Reeves will deliver a full Budget alongside economic and fiscal forecasts from the Office for Budget Responsibility (OBR).

“This Budget will involve taking difficult decisions to meet our fiscal rules across spending, welfare and tax,” the Chancellor warned.

She also announced plans for a multi-year Spending Review, which will set departmental budgets for at least three years. This could provide businesses with longer-term certainty, particularly those involved in government contracts.