British Prime Minister Rachel Reeves has rejected calls for her resignation and defended her trip to China last week, telling MPs that her economic plans could have “huge” benefits.
Last week, Mr Reeves, appearing in the House of Commons for the first time since market turmoil affected his economic plans, was accused by Conservative opponent Mel Stride of taking part in a “Shakespearean tragedy”. .
“The question now is whether to go or not,” Stride said. But Mr Reeves, supported by Labor MPs, said he would set out details of a plan to revive the flagging economy in the coming weeks.
“If we get it right, the prizes on offer to the British people will be immeasurable,” she said. Mr Reeves argued that the recent bond market turmoil, which has affected UK borrowing, reflected “global economic uncertainty”.
Pressure is mounting on the prime minister to come up with a plan to turn the economy around.
Britain’s borrowing costs have reached a 16-year high as investors grow concerned about stagflation, a combination of poor growth and persistent price pressures.
The tensions in British markets come amid a global slide in government debt in recent weeks, driven in part by fears that US President-elect Donald Trump’s proposed tariffs would lead to inflation.
The government bond market stabilized after the prime minister’s initial remarks, with the 10-year bond yield flat on the day at 4.89%, well below last week’s post-financial crisis high of 4.93%.
On Tuesday, Reeves brushed aside questions from lawmakers about whether he would be forced to cut public spending, insisting he was “absolutely determined” to stick to his self-imposed fiscal rules.
A recent rise in the UK government’s borrowing costs threatens to blow a hole in Mr Reeves’ promise to balance everyday spending and tax revenues in 2029.
Shadow Chancellor Mel Stride accuses Mr Reeves of going to China ‘with a begging bowl’ © House of Commons
Mr Reeves also said Mr Stride should have stayed in the UK to reassure the market rather than go to Beijing “with a begging bowl” to build business links with China. He said that this was essential for growth.
Mr Reeves said “not engaging is not an option”, but added that he had raised human rights issues with Chinese leaders and condemned “totally baseless sanctions against British members of Parliament”.
Mr Reeves’ statement comes amid growing unease among Labor MPs about the Prime Minister’s handling of the economy, who remain strong on his decision last year to scrap winter fuel payments for 10 million pensioners. Many members are dissatisfied.
On Monday, Number 10 announced in an unusual move that Prime Minister Keir Starmer announced he expected Mr Reeves to remain in the job until the election, just hours after Mr Reeves had refused to give such assurances. Measures were taken.
One newly elected Labor MP said: “Some people are looking at the polls and worrying about their seats. There’s a risk that Rachel Reeves could become a lightning rod for this issue, but we’re not at that stage yet. I don’t think so.”
The lawmaker said Reeves should express some “regret” over the winter fuel decision, even if he doesn’t overturn it.
Another influential Labor MP said: “There have been long-standing complaints at the Treasury, but I think the risks to Rachel’s position are excessive.” Keir can’t afford to lose her. ”
But he added there was a “lack of clarity” about how the party planned to improve living standards. “It’s all abstract and long-term. Policy risks are not effectively warned or managed.”
Mr Starmer is a lawyer by trade, and some Labor MPs see the move as an attempt to provide a number 10 counterweight to the Treasury, with more economic firepower within his team. are.
Michael Elam, a veteran of the Treasury and most recently a senior executive at HSBC, has taken on a new role as Starmer’s chief adviser on international economic issues.
Olaf Henriksson Böll, also a former Ministry of Finance official, has been appointed head of the 10th policy division.
Many Labor MPs want Mr Starmer and Mr Reeves to explain their policies more effectively, including by “educating” MPs on the fact that the UK is not alone in facing problems in its bond markets. I think it is necessary.
The pound, which sold off along with gold this year as investors worried about the direction of Britain’s finances, fell 0.4% on the day to $1.216, taking its loss for the year to 2.9%.
Additional reporting by Ian Smith
