Rachel Reeves is set to announce immediate cuts worth billions of pounds as she aims to plug a £20bn black hole.
The Chancellor will address parliament today (Monday) to announce a series of road and rail project cancellations, a reduction in spending on external consultants and a drive to cut public sector waste.
Ms Reeves is expected to blame the Conservatives for the cuts, though the Tories will argue that her message was "designed to con the British public" so she could raise taxes.
Economists had warned prior to the election that any incoming government would face a choice between raising taxes, cutting spending or abandoning its commitments to reduce medium-term debt.
Labour has described the government's financial situation as "catastrophic", while Ms Reeves is reportedly "genuinely shocked" by some of the findings.
She is expected to invite the Office for Budget Responsibility (OBR) to make an assessment of the public finances and begin the process for a long-term spending review.
It's likely that a date will also be set for the Chancellor's first budget, expected some time in autumn.