Starmer to spend tens of billions this autumn and homeowners will pay the price | Personal Finance | Finance

In September 2022, former Tory PM Liz Truss’s mini-Budget sent mortgage rates soaring and the pound into a death spiral, after unleashing £45billion of unfunded tax cuts. Calamity Liz wanted to fire the economy into life but almost destroyed it instead when global bond markets cut off our funding.

Truss was playing with fire and we all got burned.

Reeves will hold Labour’s first Budget this autumn and it could prove just as disastrous, but for the opposite reason.

Wet lettuce Liz notoriously refused to let the Office for Budget Responsibility (OBR) run the rule over her plans and for a prescient reason. The OBR would have shot them down.

Instead, the job was left to the so-called “bond vigilantes”, who demanded dramatically higher interest rates for lending to the UK.

Reeves will not make that mistake.

Instead of unfunded tax cuts we will get fully funded spending, checked off by the OBR. The problem is, those funds will come from your pocket in the shape of higher taxes.

You may not like that, but the bond vigilantes don’t care about your money. They only care about their own.

And they don’t want Reeves and PM Keir Starmer to play fast and loose with it. Unfortunately, they may struggle to resist the pressure to spend, spend, spend.

Reeves looks set to rubber stamp inflation-busting pay rises of more than 5.5 percent for two million public sector employees.

That would cost £5.5billion, rising to £10billion if handed to all six million public sector staff.

This could potentially trigger a wage-price spiral as private sector workers demand similar hikes, hitting the Bank of England’s fight against inflation and forcing it to hold interest rates at 5.25 percent, or even increase them.

Junior doctors want a 35 percent increase in their pay. Will they get that, too?

Further increases in the minimum wage, which the Tories hiked by 9.8 per cent last year, would add to the bill.

The left is furious about the two-child benefit limit and want it scrapped. That will cost around £2billion.

Energy minister Ed Miliband wants to bury the UK under wind turbines, solar panels and electric pylons as part of the green transition.

The investment will be huge. £28 billion, wasn’t it? Some put the cost as high as £800billion.

In truth, we don’t know how much Starmer and Reeves will spend, because they refused to tell us throughout the general election campaign.