Reeves faces up to the mother of all fiscal crises

Here, in crude terms, is the nightmare faced by the chancellor and the prime minister in the final two weeks before the budget - which explains why senior ministers led by the Deputy Prime Minister Angela Rayner are complaining they are being asked to make unreasonable cuts.

The sum that Chancellor Rachel Reeves needs to find, to provide an adequate increase in resources for the cash hungry NHS while providing real increases to other departments, is in the range of £35 billion to £50 billion.

This is an almost unprecedented sum for any chancellor to find.

The two big tax increases which the Treasury is working on - making employers' pension contributions subject to national insurance and increasing the basic rate of capital gains tax to between 30% and 35% - could reasonably be expected to raise a bit over £20 billion.

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That still leaves an enormous deficit, even if the Treasury were to eliminate some of the programmes and spending it identified as otiose when Reeves initially announced that spending was over-budget in the current year to the tune of £22 billion.

Little wonder departments from transport, to housing and transport are having kittens about the savings they are being asked to find.

The point is that any other substantial tax increases would breach Keir Starmer's and Labour's manifesto promises, which I am assured Reeves will not do.

There is probably some scope to borrow a bit more for day-to-day spending, as a result of the roll-over of the fifth year in the OBR's fiscal forecast. But that won't release more than another £10 billion or so.

Reeves's belated reworking of the debt fiscal rules would only create additional borrowing space for much-needed capital investment - which will be seen as welcome - but not for day-to-day spending.

So, on my rough calculations the government needs to find at least £10 billion from expenditure cuts.

Right now I can't see how Reeves escapes measures - spending cuts - that will look and feel a lot like the austerity Starmer swore not to re-introduce.

Goodness only knows how they can fix this mess in the 14 days remaining before what is shaping up to be a historic budget.

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