UK Government To Cut Costs By 15%, says UK Finance Minister

UK Finance Minister Rachel Reeves has set an ambitious goal to reduce government operational costs by 15% within four years, a move aimed at addressing the country’s strained public finances.

Speaking ahead of her highly anticipated Spring Statement on Wednesday, Reeves outlined her commitment to streamlining government spending while maintaining key fiscal rules.

In an interview with the BBC, Reeves confirmed that the plan would translate into annual savings of £2.2 billion ($2.8 billion), primarily by cutting back-office expenses within Britain’s 500,000-strong civil service. While she did not specify the exact number of job cuts, she indicated that around 10,000 positions could be eliminated.

“I would rather have people working on the front lines—in our schools, hospitals, and police force—rather than in back-office jobs,” Reeves told Sky News.

Despite these spending reductions, Reeves remains committed to her fiscal rules: ensuring that the government does not borrow to fund daily expenses and that debt falls as a share of GDP by 2029-2030.

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However, with tax increases ruled out, sticking to these rules will likely require further cuts across various government departments.

Since Labour’s landslide victory last July, reviving the UK economy has proven to be a challenge, particularly amid global uncertainties, including the return of Donald Trump to the White House.

Reeves acknowledged these changing circumstances, stating, “The world has changed. We can all see that before our eyes, and governments must respond accordingly.”

Recent economic data has added further pressure, with public sector net borrowing increasing last month, leaving Reeves with limited flexibility to balance spending and revenue. The government has already announced controversial cuts to disability welfare payments, aiming to save more than £5 billion annually by the end of the decade.

Despite the challenges, Reeves reassured the public that total government spending will continue to rise in real terms every year until the next general election, scheduled for 2029.