Rachel Reeves shrugs off calls for her resignation as she promises UK growth plan

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British Chancellor Rachel Reeves has pushed back on calls for her to resign, telling MPs her economic plans could bring a “huge” prize and defending her visit to China last week.

In his first speech in the House of Commons since market turmoil hit his economic plans last week, Reeves Mel Stride, the conservative’s opponent, accused him of being part of a “Shakespearean tragedy”.

Stride said. “To go or not to go is the question now.” But Reeves, cheered by Labor MPs, said he would present more details of a plan to revive the stagnant economy in the coming weeks.

“If we get it right, the prize on offer to the British public is huge,” he said.Reeves argued that the recent bond market turmoil affecting UK borrowing reflected “global economic uncertainty”.

The chancellor has come under increasing pressure to come up with a plan to turn the economy around.

Britain’s borrowing costs hit a 16-year high amid growing investor fears of stagflation, a combination of anemic growth and persistent price pressures.

The tension in the UK market comes amid a global sell-off in government bonds in recent weeks, driven in part by concerns that US President-elect Donald Trump’s proposed tariffs would be inflationary.

The gilts market was steady after the Chancellor’s initial announcement, with the 10-year yield at 4.89 percent on the day and well below last week’s post-financial crisis peak of 4.93 percent.

Reeves insisted on Tuesday that he was “absolutely committed” to sticking to his own fiscal rules, deflecting questions from MPs about whether he would be forced to cut government spending.

A recent surge in UK government borrowing costs threatens to blow a hole in Reeves’ pledge to balance everyday spending with tax receipts by 2029.

Reeves also said building business links with China was essential for growth, after Stride insisted he should have stayed in Britain to calm markets instead of heading to Beijing with a “begging bowl”.

“Non-involvement is not an option,” Reeves said, although he added that he had raised human rights issues with Chinese leaders and condemned the “totally unjustified sanctions against British parliamentarians.”

Reeves’ announcement comes amid growing disquiet among Labor MPs over the chancellor’s handling of the economy, with many still deeply unhappy about his decision to scrap winter fuel payments for 10 million pensioners last year.

On Monday, No 10 took the unusual step of announcing that Prime Minister Sir Keir Starmer expected Reeves to stay on at least until the election, hours after he refused to give such an assurance.

One of the newly elected MPs of the Labor Party said: “Some people are looking at the precincts and worrying about their seats. There’s a danger that Rachel Reeves will become a lightning rod for everything that goes wrong, but I don’t think we’re at that stage yet.”

The MP said Reeves should show some “regret” for his winter fuel decision, even if he reverses it.

Another influential Labor MP said: “There has long been disillusionment with the Treasury, but I think the risk to Rachel’s position is too great. Kiir cannot afford to lose her.”

But the MP added that there is “no clarity” on how the party plans to improve living standards. “It’s all abstract, long-term. The policy risks have not been effectively identified or managed.”

Starmer, a lawyer by profession, is developing the economic fire in his team, a move some Labor MPs see as an attempt to give the Treasury more counterweight in No 10.

Michael Ellam, a Treasury veteran and until recently a senior executive at HSBC, has a new role as Starmer’s chief adviser on international economic affairs.

Olaf Henriksson-Bell, another former Treasury official, has been appointed to head the No 10 policy unit.

Many Labor MPs believe Starmer and Reeves need to explain their policies much more effectively, including “educating” MPs on the fact that Britain is not the only country with problems in the bond market.

The pound, which has traded against gold this year as investors worry about the direction of Britain’s public finances, fell 0.4 percent on the day to $1,216, extending its losses for the year to 2.9 percent.

Lee Hardman, senior currency strategist at MUFG, said Reeves’ message was “designed to give the market confidence.” However, he added: “I don’t think words alone will be enough.”

Additional reporting by Ian Smith