| Hi there, it's Helen Chandler-Wilde, a Bloomberg UK journalist and editor of the Readout. Hope you enjoy today's newsletter. "Campaign in poetry, govern in prose," goes the saying attributed to former Governor of New York, Mario Cuomo. This year, Labour have taken it a step further. First they campaigned in prose, insisting that every promise in their manifesto be fully costed and lambasting other parties for not doing the same. Now in power, they have turned up the realism, governing less in prose than in bullet points, in what seems to be a bid to prepare the country for spending cuts, tax rises, or possibly both. In a speech to Parliament this afternoon Chancellor Rachel Reeves laid out the financial problems as she sees them. Before taking office, she believed Labour had the worst inheritance since the Second World War. But after arriving at the Treasury three weeks ago, she apparently discovered things were even worse than feared, finding "unfunded commitment after unfunded commitment" and a level of overspend that "was not sustainable."  Rachel Reeves earlier this month Photographer: WPA Pool/Getty Images Europe Chief among those is a £22 billion funding black hole in the public finances left by the last government, which she said "cover[ed] up the true state of the public finances." Bloomberg Economics somewhat agrees, saying that £20 billion needs to be found by 2028-29 to prevent cuts. Part of the issue, she said, was that the last government last had a spending review in 2021 – meaning the inflation spike and jump in public sector pay were not factored into budgets, something she said was "almost unprecedented." Reeves told Parliament that money would be found through various measures, including reducing the use of hotels to house asylum seekers and reviewing transport funding. There will also be a multi-year spending review, which will set departmental budgets for the next three years. But it's not all tightening: Reeves said she would accept the recommendations of public sector workers in full, committing to a substantial additional £9 billion in spending this year. Markets had a subdued reaction to the speech, with the pound close to flat for the day. Bear in mind that this was just a first taster of Labour's economic plan. Also in her speech today, Reeves announced that she would deliver her first budget on Oct. 30. Perhaps she'll be able to give us a little bit of poetry by then. Want this in your inbox each weekday? You can sign up here. | 
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