Britain Braces for ‘Painful’ Budget Meant to Recharge the Economy

As Britain’s Labour Party government prepares to deliver its first budget this week, the message to Britons for the past few months has been a dispiriting warning that they may not like what they hear.

The budget, which will be announced in Parliament on Wednesday, will be “painful,” Prime Minister Keir Starmer said. The Treasury, the department responsible for laying out the government’s tax and spending plans, has repeated a relentless mantra: “Difficult decisions” are coming.

Rachel Reeves, the chancellor of the Exchequer, faces the difficulty of setting out a fiscal plan that adheres to Labour’s campaign promises, even though those promises offer little room to maneuver.

Ms. Reeves has vowed “no return to austerity,” which many have interpreted as avoiding cuts to public spending while also promising not to raise taxes on working people. The government has said it will stick to strict rules to push down debt levels and increase investment in an effort to make Britain the fastest-growing economy in the Group of 7 nations.

“It’s a very, very challenging situation,” said Isabel Stockton, an economist at the Institute for Fiscal Studies, adding that there was pressure to spend more on benefits and public services.

“She’s kind of boxed in on those parameters,” Dr. Stockton said of Ms. Reeves. “And then she’s additionally boxed herself in with the commitments she’s made on tax.”