Ms Reeves is set to unleash her £6 billion cuts next week.

The Department for Work and Pensions’ planned cuts could be SCRAPPED by the Labour Party government as Chancellor Rachel Reeves is given another option. Ms Reeves is set to unleash her £6 billion cuts next week.

But economists have urged Ms Reeves to bend fiscal rules instead of cutting welfare. “Are there alternatives to this strategy that wouldn’t spook the market? The answer is clearly yes,” said David Blanchflower, a professor of economics at Dartmouth College in the US and a former Bank of England policymaker.

“In a world where exchange rates are changing, the tariff rules are unclear, and uncertainty is prevailing, you probably want to loosen your hand on the tiller and try to worry about the major issues that you have, which is not the fiscal rules,” he added.

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Michael Jacobs, a professor of economics at the University of Sheffield and a former adviser to Gordon Brown, said: “The sheer arithmetic suggests that something’s got to give. The argument that you could make for changing your rules is that national security is at stake.”

“The question for me is, does the government have the courage to seize the moment?” he said. Benjamin Caswell, a senior economist at the National Institute of Economic and Social Research, said: “I think markets would accept it, to be honest, because I think spending for national defence when geopolitics has changed is quite different.

“And I think that they would be receptive. The world has changed since the budget in October.” Alfie Stirling, the chief economist at the Joseph Rowntree Foundation, warned: “Something has to give.

“This would have been true even without the pressure for higher defence spending since [Donald] Trump came to power, because we have such big pressures from demographic shifts on public services.

“There’s a point at which it becomes really hard to hold together an electoral coalition in 2029 if you’ve got almost every part of the state creaking.”

It comes after Ms Reeves and Sir Keir Starmer were warned Labour MPs could QUIT over the benefits shake-up.