Rachel Reeves says Labour can’t ‘tax and spend our way to higher living standards’ before spring statement

Chancellor warned ‘that's not available in the world we live in today’ as she prepares to unveil cuts on Wednesday

Rachel Reeves has ruled out "tax and spend" policies ahead of her crunch spring statement next week.

The chancellor is under pressure to fill a hole of around £20 billion in the public finances as she scrambles to meet her own financial rules following higher-than-expected borrowing and disappointing economic growth.

A further blow to her plans came on Friday, when official figures showed government borrowing had soared past February forecasts.

In an interview with the BBC, Ms Reeves signalled that she would not raise taxes, amid expectations of swingeing cuts to government departments in her statement on Wednesday.

"We can't tax and spend our way to higher living standards and better public services. That's not available in the world we live in today," she said.

UK Government borrowing has soared above forecasts last month (Jordan Pettitt/PA) (PA Wire)

It is thought the chancellor will raise the spectre of Liz Truss's disastrous ‘mini-budget’, which led to severe marked turmoil, in the run up to her statement, arguing cuts are necessary to avoid a similar fall out.

The defence budget has already been boosted by the government’s controversial decision to slash spending on aid in half, a move which triggered the resignation of the international development minister. Sweeping cuts to welfare, totalling more than £5 billion, were also announced this week, prompting another backlash from Labour backbenchers.

When she delivers her spring statement, Ms Reeves will be responding to new forecasts from the Office for Budget Responsibility made after the Bank of England reduced its forecasts for growth this year.

Public sector net borrowing was £10.7 billion in February, £4.2 billion more than had been forecast by the OBR.

Former Labour work and pensions secretary Lord Blunkett has urged the chancellor to loosen her fiscal rules.

"I would like the chancellor to loosen a little the self-imposed fiscal rules, this is Treasury orthodoxy and monetarism at its worst," he told BBC Radio 4's the Week in Westminster.

"I would lift them marginally. I would raise the self-imposed rule by at least £10-15 billion and I would spend a great chunk of it on what we did back in '97 with the new deal for the unemployed."

Earlier this week, Treasury minister Darren Jones denied the government was "blindly cutting spending" and moving towards austerity.

Ms Reeves also told the BBC: "I recognise that with the privilege of doing a job like the one I'm doing today also comes a great deal of scrutiny. I absolutely believe that every policy that I announce, every pound of public money, of taxpayers' money that I spend, and every pound that I take from people is properly scrutinised. That's part of the job."