Ahead of the new government’s first budget on October 30, chancellor Rachel Reeves has revealed her determination to change borrowing rules that will allow her to boost investment spending.
The overriding goal of the government is to promote economic growth, after more than a decade of stagnation in living standards. In the long run, boosting growth will produce more money for the government to improve public services. But while Reeves has given a strong steer as to how she will fund the public investment needed to grow the economy in the long term, she will also have to find money for urgent improvements to struggling public services like the NHS, a key election pledge.
There are three ways that the government can raise the funds it needs to boost investment and improve key public services. It can raise taxes, increase borrowing, or make cuts to spending. Given the scale of …