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Chancellor Rachel Reeves rejected calls to resign, insisting to MPs that her economic plans could bring “huge” rewards and defending her visit to China last week.
In her first appearance in the House of Commons after market turmoil hit her economic plans last week, Reeves was accused by her colleague Mel Stride of being part of a “Shakespearean tragedy”.
Stride said, “To go or not to go, that is the question now.” But Reeves, encouraged by Labor MPs, said she would outline more details of a plan to revive the stagnant economy in the coming weeks.
“If we get it right, the reward on offer to the British public is enormous,” she said. Reeves argued that the recent bond market turmoil affecting UK borrowing reflected “global economic uncertainty”.
Stride argued that Reeves should have stayed in Britain to calm the markets rather than go to China “with a begging bowl”. Reeves said building business ties with Beijing was key.
“Non-participation is not an option,” she said, although Reeves added that she had raised human rights issues with Chinese leaders and condemned the “completely baseless sanctions against British parliamentarians”.
The chancellor is under increasing pressure to come up with a plan to turn around the economy.
Borrowing costs in the UK have hit a 16-year high amid growing investor fears of stagflation, which combines anemic growth and persistent price pressures.
The tensions in the UK market come amid a global sell-off in government bonds in recent weeks, fueled in part by fears that US President-elect Donald Trump’s proposed tariffs will be inflationary.
The bond market was steady after the chancellor’s initial remarks, with the 10-year yield unchanged at 4.88 percent, well below last week’s post-financial crisis record of 4.93 percent.
Reeves’ statement came amid growing unrest among Labor MPs over the chancellor’s handling of the economy, with many still deeply unhappy about her decision last year to scrap winter fuel payments for 10 million pensioners.
On Monday, No 10 took the unusual step of announcing that Starmer expected Reeves to remain in the role until the election, just hours after the Prime Minister refused to give such a guarantee.
One newly elected Labor MP said: “Some people look at the polls and worry about their seats. There is a danger of Rachel Reeves becoming a lightning rod for what went wrong, but I don’t think we’re at that stage yet.”
This is a developing story
