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We’ll find out more tomorrow, when Reeves is set to make a huge decision that will affect every single one of us. If she gets it wrong, she risks triggering another Liz Truss moment and sending interest rates through the roof. If she gets away with it, she’s only saving up problems for later.
So what’s she up to?
During the general election, Reeves pledged to stick to a UK fiscal rule that states the country’s national debt must be falling as a share of the economy within five years.
That sounds like a good rule to me, although it’s proving tricky to comply with in practice. Former Tory chancellor Jeremy Hunt didn’t manage it.
Reeves isn’t going to manage it either. So instead of sticking with the rule she’s going to wish it away and hey presto, she’s got another £57billion at her fingertips.
The money will apparently come out of nowhere but don’t be fooled.
Basically, Reeves is playing with numbers. She knows it, too. But she’s desperate so will almost certainly press the magic button anyway.
One way that Reeves will distort the rule will be to claim that the nation’s debt is actually smaller than it really is because the government is owed £236billion in unpaid student loans. She’ll then deduct that figure from the total and abracadabra, our debt is smaller.
She may then stick a value on all the things the government owns, such as roads and parks, and use that to shrink the debt even more.
It’s all smoke and mirrors, of course. Worst of all, Reeves knows it.
During the general election, she swore she wouldn’t pull this accounting trick.
Now she’s discovering that all those exciting new taxes she was lining up won’t generate half as much revenue as she hoped.
So she’s in a bit of a jam. As are the rest of us.
The UK is sitting on a massive debt timebomb and if we don’t defuse it, we’re heading for disaster.
We owe a staggering £2.6trillion in total. That’s roughly the size of our entire economic output for a year.
The debt will still be there, even after Reeves has tucked her wand away.
All she’ll have achieved in practice is to add another £57billion to the total. Ultimately, taxpayers will be the ones charged with paying it all back.
But not on her watch.
By the time the bill lands Reeves will have pulled the ultimate magic trick and vanished from government.
She’ll pop up working for some think tank or talking shop, while we’ll be stuck with the real world consequences of her decision to dabble in the dark arts. Her sleight of hand will soon come back to haunt us all.