Chancellor to address parliament as economic pressure mounts over cost of borrowing and falling pound. Chancellor Rachel Reeves has been warned that imposing public spending cuts would be “political suicide”, after the Treasury vowed to be “ruthless” in seeking to quell the current economic turmoil.
Ms Reeves is set to make a statement to the Commons on Tuesday following her trip to China, after the cost of government borrowing hit its highest level since the financial crisis by one measure, and the value of the pound fell. In a bid to calm the markets, as the rise in gilt yields eviscerates the £9bn of “headroom” left in the chancellor’s Budget, leaving her at risk of breaking her fiscal rules, Ms Reeves was reportedly ordering cabinet ministers to be “ruthless” in identifying public spending cuts.
But former Labour shadow chancellor John McDonnell warned on Tuesday morning that further spending cuts would amount to “political suicide” and risked turning an economic “crisis into a recession” by taking demand out of the economy. As speculation mounted on Monday that Sir Keir Starmer could sack her, Downing Street insisted that Ms Reeves will be the chancellor “for the whole of this parliament”.
Chancellor Rachel Reeves is set to make a statement in the Commons, as she returns from her trip to China to face a wave of growing economic unease. As speculation swirled on Monday over the chancellor’s future in No 11, the Liberal Democrats urged Ms Reeves to hold an emergency meeting with banks to reassure mortgage holders.
