Overview

• Reeves shelved planned Personal Independence Payment and Universal Credit cuts after a backbench revolt, creating a £5 billion fiscal shortfall.
• Her tearful appearance at Prime Minister’s Questions unsettled bond markets and raised concerns over rising borrowing costs.
• She has warned cabinet that only new tax measures, such as increases to income tax, national insurance or VAT, can fill the gap without reopening the spending review.
• The Institute for Fiscal Studies has cautioned that the hole could swell to £30 billion if economic growth forecasts are downgraded, making substantial tax rises likely.
• Despite Keir Starmer’s public backing, she confronts mounting pressure from backbenchers and fiscal watchdogs to reconcile manifesto pledges with Labour’s fiscal rules.