Rachel Reeves gives Downing Street speech ahead of Budget

“The choices I make in this Budget, this month, will be focused on getting inflation falling and creating the conditions for interest rate cuts to support economic growth and improve the cost of living,” she added.

“The truth is that previous governments have not adequately faced up to these challenges.

“Too often, political convenience has been prioritised over economic imperative.

“The decision to pursue a policy of austerity after the financial crisis dealt a hammer blow to our economy, gutting our public services and severing the flows of investment that would have put our country on a path to recovery.

“The years that followed were characterised by instability and indecision, with crucial capital investment continually sacrificed, and hard decisions put off again and again.

“And then a rushed and ill-conceived Brexit that brought further disruption as businesses trying to trade were faced with extra costs and extra paperwork.”

This comes as tax rises at the Budget have been declared “inevitable” by a think tank with close links to Labour.

The Resolution Foundation suggested there was a way to implement tax rises which “boosts confidence in the economy and the public finances, while also reducing child poverty and the cost of living”.

The government should aim to double fiscal headroom in the November 26 statement to the Commons, the foundation suggested in its pre-Budget preview.

This would result in the buffer against unexpected changes in the economic headwinds being increased to £20 billion, but the think tank acknowledged an increase of £15 billion was “perhaps” more realistic.

Chancellor Rachel Reeves said in the speech this morning that despite the UK’s “considerable economic strengths” it had been hit by a series of global challenges and persistent problems with productivity.

Setting out the challenges she will face in her Budget later this month, she said “the world has thrown even more challenges our way” in the last 12 months.

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“The continual threat of tariffs has dragged on global confidence, deterring business investment and dampening growth.

“Inflation has been too slow to come down, as supply chains continue to be volatile, meaning the costs of everyday essentials remain too high.

“And the cost of government borrowing has increased around the world, a shift that Britain, with our high levels of debt left by the previous government, has been particularly exposed to.”