However, one senior economist questioned whether Labour was overstating how bad the UK’s fiscal situation was — suggesting that Reeves could have as much as £16 billion of headroom in her budget — up from the £8.9 billion that her predecessor Jeremy Hunt had in March.
Ruth Gregory, from Capital Economics, said that they believed the new government was “overplaying the gloom”.
She said: “There’s no doubt that the fiscal position is dismal. At 4.5 per cent, the budget deficit is still well above the three per cent average in the five years prior to the pandemic. And the public debt burden has risen from 85.2 per cent of GDP in 2019 to 97.8 per cent in 2023-24".