Reeves says ‘economic headwinds’ are a reminder of the need to ‘go further and faster’ on growth
Chancellor Rachel Reeves has pledged to go “further and faster” to improve economic growth after market turmoil pushed up the cost of servicing Britain’s debt.
In recent days, pressures on public finances have increased, after public borrowing costs reached their highest level in several years.
Conservative shadow chancellor Mel Stride called it a “crisis from Downing Street”, saying corporation tax increases announced in the October budget had damaged the UK’s economic outlook.
Reeves said she had “no illusions” about the scale of the challenge, but argued Labour’s approach would bring stability to the public finances and unlock more investment.
The Chancellor was speaking in the Commons after returning to the UK from a trip to China to attract investment.
During the debate, she accused conservative critics of ignoring the “global volatility” behind rising borrowing costs in other countries like the United States, Germany and France.
“The economic difficulties we face remind us that we should, and indeed must, go further and faster in our plan to revive economic growth which plunged under the last government,” she told MPs .
Reeves promised to outline new economic policies after the World Economic Forum meets in Davos next week.
On Tuesday, the yield on 30-year government bonds – the interest rate at which the government repays investors – stood at 5.42%, close to its highest level since 1998.
The yield on the 10-year repayable debt rose to 4.87%, close to the highest level since 2008.
If sustained, rising borrowing costs in the UK could increase annual debt interest by £10 billion by 2029-30, wiping out the £10 billion headroom available to the Chancellor in relation to the budgetary rules she imposed on herself.
Speaking in the House of Commons, Stride accused the government of “bashing the economy” and “crippling businesses” with budget increases in employers’ national insurance contributions.
“Growth has been killed, inflation is rising, affecting millions, interest rates are staying higher for longer and business confidence has collapsed,” he added.
“This is a crisis created in Downing Street.”
On Monday, Sir Keir Starmer said he had “full confidence” in Reeves and that the government was committed to its fiscal rules.
But Conservative leader Kemi Badenoch accused him of refusing to support her after refusing at a news conference to answer specifically whether she would be in office in the next election.
Downing Street later confirmed that the Prime Minister intended to keep Reeves as chancellor for the duration of this parliamentary term.
