Reeves says market uncertainty shows need to kickstart economic growth
Rachel Reeves insisted the turbulence in the financial markets underlined the need to go “further and faster” in search of economic growth.
The Chancellor faced questions in the Commons after the cost of government borrowing increased and the value of the pound fell in recent days, putting her plans for the nation’s finances at risk.
Ms Reeves told MPs: “We have seen global economic uncertainty play out in the last week.
“But leadership is not about ducking these challenges, it is about rising to them.
“The economic headwinds that we face are a reminder that we should – indeed, we must – go further and faster in our plan to kickstart economic growth.”
China
The Chancellor was addressing the Commons following her return to the UK from a trip to China which was criticised by opposition MPs.
She said agreements reached in Beijing and Shanghai, where she held discussions on trade and investment, would be worth £600 million to the UK over the next five years.
But shadow chancellor Mel Stride said a “black hole has opened up in the public finances while (Ms Reeves) was absent from her station”.
“To give a sense of scale, the deal the Chancellor has announced amounts to £120 million a year.
“The rise in our borrowing costs due to her disastrous Budget has added around £12 billion to our annual spending on debt interest alone – literally 100 times what she says she has brought back from Beijing.
“That is money that cannot now go on the public priorities, £12 billion is enough to pay for 300,000 nurses, to cover Labour’s pernicious winter fuel payment cut for eight-and-a-half years.”
The situation was discussed at Cabinet, where Ms Reeves updated her colleagues on the global and UK economy.
“Relentless”
Downing Street said Ms Reeves “reiterated that the Government would continue to take an approach that was relentless in supporting growth and cracking down on waste and inefficiency”.
Ms Reeves restated her commitment to her fiscal rules, which include meeting day-to-day spending through tax revenues.
But rising borrowing costs eat into the money available for public services, leaving Ms Reeves faced with either slashing spending or hiking taxes again, something she has pledged not to do.
Ministers were offered some relief on Tuesday morning as the pound regained its footing after hitting fresh 14-month lows on Monday, while UK Government bonds recovered some lost ground after a recent heavy sell-off.
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Time to start closing the tax fairness gap, like endlessly carrying losses forward. Why reward failure when there’s Brexit to pay for.
Keynes said that it was better to be roughly right than precisely wrong. Reeves is the latter. Wrong dogma, wrong policies, indifferent or negative outcomes. The vast majority of people in Cymru cannot expect improvements until there is a dramatic change of economic policy. It’s increasing clear that ‘the UK’ will not or cannot offer us that. We must ditch neo-liberal capitalism, the dysfunctional union and the unsustainable depletion of our natural resources. We must adopt policies that can help us mitigate climate change rather than, like Reform, denying it. As fires rage in California, the Arctic melts and Cymru… Read more »
Really, we should call Farage’s Reform the Flat Earth Party. Not only do they want to reduce the capacity of the government to create the money (their Quantitative Easing (Prohibition) Bill) that saved us during the 2008 – 2009 banking crisis and paid for Covid, but they want the UK to go back to the Gold Standard!
Hilarious or just sad? Certainly idiocy of the highest order.
“...saved us during the 2008 – 2009 banking crisis…” Surely you mean saved the banksters bacon, and anything of ours that was saved was just coincidental. Much as I appreciated that banks needed to be protected the manner in which it was done smacked of the old elitist mentality. Some of those guys should have been fired on the spot instead of being awarded juicy protection. Governments of both colours were equally soft and gullible.