LONDON (AFP) – Britain’s new chancellor of the exchequer said Sunday she would manage the economy with “iron discipline” but suggested she would give public sector workers a pay rise above inflation to help end a wave of strikes and conflict.
The Labour government is under pressure from supporters and unions to spend more on wages and social benefits, two weeks after it was elected on promises not to raise personal taxes or increase public borrowing.
“I think people know it’s a disaster,” Chancellor Rachel Reeves told the BBC, saying the Conservative government had left “public services on their knees, a fiscal burden at its highest level in 70 years, almost the same debt as our entire economy.”
“I will talk to people about the scale of the challenge and then start laying the groundwork,” he said. “I will guide our economy with iron discipline and restore stability.”
The centre-left Labour Party won a landslide election victory on July 4 on a promise to grow the UK’s stagnant economy, unleash a wave of housing and green energy projects and overhaul the country’s ailing public services.
He faces a cautious and weary electorate, keen to ease the cost of living crisis.
Inflation has fallen to 2% and Prime Minister Keir Starmer’s government wants to resolve strikes by thousands of doctors in the ailing National Health Service. Nurses, teachers, rail workers and other public sector workers have also gone on strike over the past year to demand higher pay.
Reeves, the first woman to head the UK Treasury, said the government was studying the recommendations and would find a way to give workers a raise “and increase the amounts”.