Rachel Reeves has told Sky News she is looking at both tax rises and spending cuts in the budget, in her first interview since being briefed on the scale of the fiscal black hole she faces.

“Of course, we’re looking at tax and spending as well,” the chancellor said when asked how she would deal with the country’s economic challenges in her 26 November statement.

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Ms Reeves was shown the first draft of the Office for Budget Responsibility’s (OBR) report, revealing the size of the black hole she must fill next month, on Friday 3 October.

She has never previously publicly confirmed tax rises are on the cards in the budget, going out of her way to avoid mentioning tax in interviews two weeks ago.

Cabinet ministers had previously indicated they did not expect future spending cuts would be used to ensure the chancellor met her fiscal rules.

Ms Reeves also responded to questions about whether the economy was in a “doom loop” of annual tax rises to fill annual black holes. She appeared to concede she is trapped in such a loop.

Asked if she could promise she won’t allow the economy to get stuck in a doom loop cycle, Ms Reeves replied: “Nobody wants that cycle to end more than I do.”

She said that is why she is trying to grow the economy, and only when pushed a third time did she suggest she “would not use those (doom loop) words” because the UK had the strongest growing economy in the G7 in the first half of this year.

What’s facing Reeves?

Ms Reeves is expected to have to find up to £30bn at the budget to balance the books, after a U-turn on winter fuel and welfare reforms and a big productivity downgrade by the OBR, which means Britain is expected to earn less in future than previously predicted.

Yesterday, the IMF upgraded UK growth projections by 0.1 percentage points to 1.3% of GDP this year – but also trimmed its forecast by 0.1% next year, also putting it at 1.3%.

The UK growth prospects are 0.4 percentage points worse off than the IMF’s projects last autumn. The 1.3% GDP growth would be the second-fastest in the G7, behind the US.

Last night, the chancellor arrived in Washington for the annual IMF and World Bank conference.

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‘I won’t duck challenges’

In her Sky News interview, Ms Reeves said multiple challenges meant there was a fresh need to balance the books.

“I was really clear during the general election campaign – and we discussed this many times – that I would always make sure the numbers add up,” she said.

“Challenges are being thrown our way – whether that is the geopolitical uncertainties, the conflicts around the world, the increased tariffs and barriers to trade. And now this (OBR) review is looking at how productive our economy has been in the past and then projecting that forward.”

She was clear that relaxing the fiscal rules (the main one being that from 2029-30, the government’s day-to-day spending needs to rely on taxation alone, not borrowing) was not an option, making tax rises all but inevitable.

“I won’t duck those challenges,” she said.

“Of course, we’re looking at tax and spending as well, but the numbers will always add up with me as chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof.”

Blame it on the B word?

Ms Reeves also lay responsibility for the scale of the black hole she’s facing at Brexit, along with austerity and the mini-budget.

This could risk a confrontation with the party’s own voters – one in five (19%) Leave voters backed Labour at the last election, playing a big role in assuring the party’s landslide victory.

The chancellor said: “Austerity, Brexit, and the ongoing impact of Liz Truss’s mini-budget, all of those things have weighed heavily on the UK economy.

“Already, people thought that the UK economy would be 4% smaller because of Brexit.

“Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year on food and farming, goods moving between us and the continent, on energy and electricity trading, on an ambitious youth mobility scheme, but there is no doubting that the impact of Brexit is severe and long-lasting.”

Britain must prepare for at least 2C of warming within just 25 years, the government has been advised by its top climate advisers.

That limit is hotter and sooner than most of the previous official advice, and is worse than the 1.5C level most of the world has been trying to stick to.

What is the 1.5C temperature threshold?

Under the 2015 Paris Agreement, countries agreed to try to limit warming to “well below” 2C – and ideally 1.5C.

But with global average temperatures already nearing 1.4C, warnings that we may have blown our chances of staying at 1.5C have been growing.

This new warning from the government’s top advisers, the independent Climate Change Committee (CCC), spells out the risk to the UK in the starkest terms yet.

In a letter today, the CCC said ministers should “at a minimum, prepare the country for the weather extremes that will be experienced if global warming levels reach 2C above pre-industrial levels by 2050”.

It is the first time the committee has recommended such a target, in the hopes of kickstarting efforts to make everything from flooded train tracks to sweltering classrooms more resilient in a hotter world – after years of warnings the country is woefully unprepared.

How climate change affects the UK

The UK is already struggling to cope with the drought, flooding, and heat brought by the current 1.4C – “let alone” what is to come, the advisers said.

Just this year, the country battled the second-worst harvest on record and hottest summer ever, which saw an extra 300 Londoners die.

“Though the change from 1.5C and 2C may sound small, the difference in impacts would be substantial,” CCC adviser Professor Richard Betts told Sky News.

It would mean twice as many people at risk of flooding in some areas, and in southern England, 10 times as many days with a very high risk of wildfires – an emerging risk for Britain.

The experts said the mass building the government is currently pushing, including new nuclear power stations and homes, should even be adaptable for 4C of warming in the future – a level unlikely, but which cannot be ruled out.

Is it too late to stop climate change or limit to 1.5C?

The CCC’s Baroness Brown said in a briefing: “We continue to believe 1.5C is achievable as a long-term goal.

“But clearly the risk it will not be achieved is getting higher, and for risk management we do believe we have to plan for 2C.”

World leaders will discuss their plans to adapt to hotter temperatures at the COP30 climate summit in Brazil in November.

Professor Eric Wolff, who advises the Royal Society, said leaders needed to wake up.

“It is now very challenging even to stay below two degrees,” he told Sky News.

“This is a wake-up call both to continue reducing emissions, but at the same time to prepare our infrastructure and economy for the inevitable climate changes that we are already committed to.”

Premier League chief executive Richard Masters has told Sky News players will take the knee at this weekend’s matches amid ongoing discussions about whether the anti-racism move is still effective.

Captains of the 20 clubs are understood to back the move, although players could decide individually to opt out.

The majority of Women’s Super League teams recently decided against taking the knee in games marking Black History Month, feeling it was no longer meaningful amid a rise in racism.

Sky News revealed last week that online racism cases in English football have quadrupled this season.

And in his exclusive interview, Mr Masters raised concerns about the anonymity of social media users posting abuse and questioned whether identity checks were now necessary.

The Premier League wants platforms to do more to change algorithms to stop players seeing the abuse, and to introduce additional protections to stop it reaching their inboxes.

Football frames racism as a societal problem – requiring education – and Sky News accompanied Mr Masters on a school visit in west London, where the Premier League linked up with Brentford.

Taking the knee

This weekend’s matches will highlight the league’s “No Room for Racism” campaign to combat discrimination and promote equality.

It was in 2020, inspired by the Black Lives Matter movement, that Premier League players started to take the knee before kick-off.

But questions about the effectiveness of the gesture have grown.

“It’s always been their choice,” Mr Masters told Sky News of the players. “It’s never been something that has been forced upon them, either collectively or individually. They had another discussion in the summer.

“They’re going to do it really at the No Room for Racism match rounds. We then decide whether they want to continue or stop. So I think they want to make sure whatever they do, it’s effective.”

‘You’ll be dealt with’

This is a season that began with Bournemouth’s Antoine Semenyo reporting being racially abused at Liverpool, although Mr Masters said “the protocols worked”.

He added: “A lot of our players and participants, managers, referees are subject to abuse, a lot of it racism.

“And we’re trying our best to deal with that, working with our stakeholders and working with the social media companies to try to solve those issues.”

For the league, that is not symptomatic of racist abuse becoming more prevalent in stadiums.

“The Premier League is a very permissive environment,” Mr Masters said. “Very few other places you can come and scream and shout and support your team.

“But I think that fans know where that line is. No violence, no threatened intimidation, and no discrimination. If you do, then you’ll be dealt with.”

Polarised society

The political climate can become problematic, although Mr Masters does not directly reference the summer’s anti-immigration protests when asked.

“Those are political issues, and I think that football’s role is to provide that distraction,” he said.

“Football stands slightly to the side to where society is at the moment, where we are seeing a little bit of polarisation of views. Football, I think, can help in that aspect.”

Social media anonymity

Too many feel they can hurl racist abuse at footballers on social media – and Mr Masters insists the league is “very restless” about eradicating that.

Greater identity checks could help.

Mr Masters said: “There’s an anonymity to it, I think, which, perhaps wrongly, in my view, gives people the view that they can pretty much say and do what they want.

“And I just simply don’t think it should be part of a professional footballer’s life to have to put up with this sort of stuff, which is why we’re taking what action we can.

“Obviously, anything that makes it easier [to find the perpetrators] I would be in principle supportive of, but I think it goes to a lot of other issues around freedom of information.”

AI and algorithms

There is a unit at the Premier League dedicated to pursuing social media firms over racist abuse, which has no complaints publicly about the conduct of the tech giants.

But the league’s director of content protection, Tim Cooper, told Sky News: “The platforms can do more by changing their algorithms, looking at the opting in to see abuse rather than perhaps opting out of seeing it. That would be a step in the right direction.

“And ultimately, it’s for us to keep trying to push cases through and get good real-world deterrent actions, alongside law enforcement and other enforcement bodies around the world.”

There are concerns about the use of AI to create racist images and abusers using phrases or jumbled letters to circumvent algorithms.

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“It’s very much gone beyond just a text rant now, which is obviously bad enough, but now we’re seeing that people are using images to create some of the most offensive things that you could imagine,” Mr Cooper said.

“I think video will be something in the future going forward that could be a problem, and we have seen that with deepfakes.”

Instagram owner Meta and Elon Musk‘s X both said they would not provide detail about any work to eradicate racism – declining months of requests for interviews.

Being on social media means children are more aware than ever of incidents of racist abuse across football.

After leading the class in west London, Premier League Primary Stars coordinator Benjamin Abrahams said: “Having to speak to young pupils about things they’ve heard, things they know about, can sometimes be tough.

“But actually, it’s a great chance to speak to them and have those open conversations. To discuss why things are said, why things happen, but [why] it’s not right, and be able to discuss what is correct and what should we all hope for.”