Rachel Reeves is set to slash billions of pounds from the Government’s budget at the Spring Statement, after market turmoil and weak economic growth threatened to break one of her central accounting rules.

The Treasury has briefed the BBC that major cuts are coming in the spring – a move that will spark civil war within the Labour Party.

On entering No 11 Downing Street, Ms Reeves pledged that she would eliminate the deficit by the next election.

The last Budget left her with just over £9billion pounds of so-called fiscal “headroom”, a buffer that would allow for economic fluctuations while still keeping her on course to meet her economic rules.

However, on Wednesday the Government will inform the Office for Budget Responsibility (OBR) of its “major measures” set to appear in the Spring Statement. They include swingeing cuts in order to get Ms Reeves’s plans back on track.

Insiders have told the BBC that the spending cuts will be “politically painful”, with the soaring welfare bill squarely in Ms Reeves’s crosshairs.

Despite many blaming Ms Reeves for the stuttering economy, the Treasury has insisted she is being forced into a corner by global economic policy and geopolitical uncertainty.

A government insider told the BBC: “Clearly the world has changed a lot since the autumn Budget. People are watching that change happen before their eyes.”

“The Office for Budget Responsibility will reflect that changing world in its forecasts later this month and a changing world will be a core feature of the Chancellor’s response later this month.”

However, the Conservatives’ Shadow Business Secretary Andrew Griffith said: “If the Chancellor had STARTED by cutting spending in the first place – as Conservatives argued – she would not have crushed growth and her Budget tax hikes wouldn’t have been needed.”

“This is another slap in the face for business!”

There will also be demands placed on the NHS and Civil Service to find significant efficiency savings.

A government insider added: “Headroom or no headroom, the Chancellor is determined to push through the change we need to make Britain more secure and prosperous, with the whole Government making that argument in the coming weeks.”

A report last year warned Britain’s welfare bill is set to increase by £60billion in the next four years.

While half of this is the cost of the state pension, just under half (47%) is from a boom in welfare spending on those claiming they are too sick to work.

In recent weeks, Tory leader Kemi Badenoch and former prime minister Rishi Sunak have called on Sir Keir Starmer to slash this in order to fund an increase in defence spending.

Ms Reeves will deliver her Spring Statement on March 26. It is not expected that she will make any further tax changes.