Keir Starmer has ‘full confidence’ in Rachel Reeves despite pressure on UK chancellor

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Sir Keir Starmer has declared his “full confidence” in Chancellor Rachel Reeves, but refused to say whether she will remain in office at the next election.

In the wake of falling business confidence, criticism of the October budget and market turmoil, the Prime Minister on Monday refused to answer questions about whether: Reeves will be chancellor for the entire parliament.

“Rachel Reeves is doing a fantastic job. he has my full confidence,” he said at a press conference in London. “He has the full confidence of the entire party.”

Reeves, who returned from a trip to China on Monday, is under pressure to show he has a growth strategy after China UK economy stagnated at the end of 2024 with rising inflation.

Prime ministers usually refuse to guarantee the job of any cabinet minister for a full parliament, but the Conservatives took advantage of Starmer’s refusal to answer a question about Reeves’ longevity at the Treasury.

They noted that last November, Starmer’s spokesman appeared to suggest that David Lammy would serve as foreign secretary until 2029. “Yes, he is the foreign secretary,” the spokesman said at the time.

Shadow Treasury Secretary Gareth Davies said: “The fact that Keir Starmer has repeatedly refused to say whether Rachel Reeves will stay on as chancellor speaks volumes.”

Meanwhile, Starmer confirmed that ministers must be “relentless” in reining in public spending as the government struggles to stay within its own borrowing rules.

“In terms of a ruthless approach when it comes to finances and spending, yes, we’re going to be ruthless,” Starmer said. “We have clear fiscal rules and we’re going to stick to those fiscal rules.”

Recent turmoil in bond markets has pushed up government borrowing costs, threatening to blow a hole in Reeves’ pledge to balance day-to-day spending with tax revenue by 2029.

Britain’s borrowing costs rose sharply after the October Budget as a global bond sell-off combined with higher borrowing and fears of a stagnating UK economy rose on Monday as the 10-year bond yield rose 0.04 percentage point to 4.87 percent, moving toward a 16-year high set last week.Yields rise as prices fall are

Sterling, which has been buoyed by the sell-off in gilts, lost another 0.4 percent on Monday against a resurgent U.S. dollar, pushing the pound to $1.215 in early afternoon trade, bringing losses for the year to more than 2.8 percent. the worst performer among the world’s major currencies.

Dean Turner, an economist at UBS Wealth Management, said Reeves was under pressure because waiting “in the hope that the whole episode will play out” would not be seen as a “credible” response by investors.

The chancellor is awaiting new data this week that will shed further light on the government’s efforts to strengthen the economy.

Official December inflation figures will be released on Wednesday, which are expected to show an annual increase in the consumer price index of 2.6 percent last month, unchanged from November’s reading.

November GDP figures will be released next day, with a Reuters poll showing a slight increase of 0.2 percent.

Higher yields since the Budget will not only dampen the growth outlook, but are likely to add around £12 billion to the government’s annual interest costs, according to calculations by Pantheon Macroeconomics’ Rob Wood.

If they stick, they will more than wipe out the chancellor’s entire £9.9bn gap against his current budget rules, reinforcing calls for the chancellor to take immediate action in March to further cut public spending.

“Reeves will have to tighten policy in the spring,” the note said, “but he will likely gradually cut spending plans over five years.”