London (AFP) – Britain’s finance minister Rachel Reeves is expected to address parliament Tuesday to try and regain the confidence of markets in the face of rising pressure over the country’s struggling economy. Chancellor of the Exchequer Reeves, in the role for just over six months following Labour’s election win, has faced calls to resign from opposition MPs, even if a recent runup in bond rates is not limited to the UK.
“Rachel Reeves is doing a fantastic job. She has my full confidence,” Prime Minister Keir Starmer told parliament Monday as he faced a barrage of questions over her future as finance minister. UK 10-year bond yields, a key indicator of market confidence, hit last week the highest level since the 2008 global financial crisis. That puts fiscal pressure on the government and could force it to cut spending and further hike taxes. Reeves’ announcement in her maiden budget in October that taxes would rise for businesses has partly been blamed for Britain struggling to grow its economy in recent months.
Despite the concerns, the pound regained its footing against the dollar Tuesday, after hitting 14-month lows the day before.
– Political pressure –
Reeves has yet to comment over the fallout, deciding instead to carry out a recent visit to China focused on strengthening ties with the world’s second-largest economy. Conservative leader Kemi Badenoch has said Reeves is “hanging on by her fingernails” in the role of chancellor. “Keir Starmer and Rachel Reeves have driven Britain’s economy into the ground,” she recently told parliament. The centrist Liberal Democrats called on Reeves to remain in the UK rather than visit China — and to announce a “Plan B” amid market troubles.
Labour has seen its public approval rating slump since its landslide election win in July that ended 14 years of Conservative rule on the promise of economic growth. “We never pretended… that after 14 years of failure, you can turn around our economy and our public services before Christmas,” Starmer said Monday. “Before the election, I said it’s not going to be possible to do this in six months. It’s going to take time.”
Starmer is also facing calls to sack his anti-corruption minister Tulip Siddiq after she was named in an investigation in Bangladesh focused on her aunt, the country’s ousted leader Sheikh Hasina. Piling on the pressure, billionaire Elon Musk — who is set for a role in President-elect Donald Trump’s administration — has used his X platform to launch a barrage of posts assailing Starmer and other Labour party figures. “Nobody trusts Starmer and for good reason. Investors won’t invest without trust. He has created a financial crisis for Britain,” Musk wrote last week on the social media platform.
© 2024 AFP
