The chancellor has earmarked several billion pounds in draft spending cuts to welfare and other government departments ahead of the Spring Statement.
The Treasury will put the proposed cuts to the government’s official forecaster, the Office for Budget Responsibility (OBR), on Wednesday amid expectations the chancellor’s financial buffer has been wiped out.
Sources said “the world has changed” since Rachel Reeves’s Budget last October, when the OBR indicated she had £9.9bn available to spend against her self-imposed borrowing rules.
The OBR’s forecast is likely to see that disappear because of global factors such as trade tariffs, as well as higher inflation and borrowing costs in the UK.