The UK government is poised to announce the most significant spending reductions since the onset of austerity measures, with Chancellor Rachel Reeves set to reveal plans to slash Whitehall budgets by billions more than previously anticipated.

This decision, to be disclosed in the upcoming spring statement, may lead to cuts of up to 7% for various departments over the next four years.

Economists caution that these reductions will adversely impact essential public services, despite Labour's commitments to reverse years of decline under Conservative leadership.

These cuts come on the heels of ministers proposing £5 billion in cuts to benefit payments, primarily targeting disabled individuals, who could see their benefits drop by nearly £10,000 annually by the end of the decade.

Labour MPs express concern that the additional spending cuts will place even greater strain on the nation’s poorest families.

The government has made it clear that departments must achieve further efficiencies, with some ministers already implementing reductions to welfare payments and NHS England.

Treasury officials assert that last year’s budget met many of Labour’s desires, featuring substantial tax increases and borrowing to finance an additional £70 billion in annual spending.

However, the British economy has faced challenges since then, with rising borrowing costs and slower-than-anticipated growth.

The Chancellor’s announcement next week, initially intended to be a straightforward update on economic forecasts, will now encompass notable spending cuts.

The Office for Budget Responsibility will provide its final forecasts on Friday, including an evaluation of how close the government is to meeting its commitments for a balanced day-to-day budget by 2029-30 and reducing debt by the same date.

Government insiders have indicated that no tax increases will be proposed next week, despite Conservative assertions that the Chancellor plans to implement a stealth income tax raid by freezing the threshold for when individuals start paying income tax.

The Institute for Fiscal Studies estimates that budgets for other departments, including justice, the Home Office, and local government, could decline by about 1.9% annually, amounting to a 7% reduction over the remainder of the parliament, in light of anticipated funding increases for the NHS, schools, and defense.

Ministers contend that these cuts do not equate to austerity, as the annual reductions would be roughly half as severe as those managed by former Chancellor George Osborne from 2010 onwards.

Nonetheless, economists point out that these cuts will occur while public services are already under pressure, unlike in 2010 when they had benefited from years of budget increases that outpaced inflation.

The potential for further spending reductions is raising alarms among cabinet members, with several expressing their worries about the cuts during a strained cabinet meeting last week.

As part of the spending review process, departments have been tasked with modeling cuts of up to 20% of their day-to-day expenditures, which could impact recently announced initiatives such as the proposed rail link between Oxford and Cambridge.