UK finance minister Reeves says she will stic

LONDON, March 23 (Reuters) - British finance minister Rachel Reeves said on Sunday that she will stick to her fiscal rules despite global upheaval, raising the prospect of belt-tightening measures to meet her financial targets in a budget update this week.

In her first full budget last October, Reeves sought to show investors that she could be trusted with the public finances by announcing a rule to bring day-to-day spending into balance with tax revenue by the end of the decade.

But she is believed to have been knocked off course already by slower than expected economic growth and higher borrowing costs in financial markets. Furthermore, a potential global trade war triggered by U.S. President Donald Trump's import tariffs has led to downgrades to the international outlook.

"The world has changed. We can all see that before our eyes, and governments are not inactive in that," Reeves said in an interview with Sky News television. "We'll respond to the change and continue to meet our fiscal rules."

Asked about possible spending cuts in her Spring Statement on Wednesday, Reeves said that public spending was still expected to rise by more than inflation each year of the current parliament, which is due to end in 2029.

"But as a government, we have to decide where that money is spent, and we want to spend it on our priorities," she said.

Reeves said she believed that 10,000 public sector jobs could be cut as part of the government's spending restraint.

A cabinet office source said on Saturday that Reeves was considering spending cuts for government departments to save more than 2 billion pounds ($2.58 billion) a year by the end of the decade.

"I'm confident that we can reduce civil service numbers by 10,000," Reeves said. "During COVID there were big increases in the number of people who were working in the civil service. That was the right thing to do ... But it's not right that we just keep those numbers there forever."

(Writing by William Schomberg Editing by David Goodman)