Sir Keir Starmer refuses to guarantee Rachel Reeves will still be chancellor at next election | Politics News

Sir Keir Starmer has refused to guarantee Rachel Reeves will still be chancellor by the next general election.

The prime minister said he had “full confidence” in his colleague, but would not be drawn on her long term future.

Ms Reeves is under pressure after the cost of long-term borrowing rose to its highest level in decades while the value of the pound has slumped.

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Sir Keir did not answer directly when asked if she will remain in Number 11 for the duration of this parliament, only saying that he is “confident in our mission for growth”.

Pressed again on Ms Reeves’s future, he said: “Rachel Reeves is doing a fantastic job.

“She has my full confidence. She has the full confidence of the entire party.”

He said she was given an “incredibly challenging task” at the budget in October, in which she announced tax hikes and spending cuts, “because not only was the economy broken, but we had a £20bn black hole”.

“She’s right to take the tough decisions, because as anybody who’s turned around a business or organisation will know, if you’re going to turn something around, you’ve got to take the tough decisions first,” Sir Keir added.

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However, Conservative Party leader Kemi Badenoch said the Labour government had “driven Britain’s economy into the ground” as she claimed the prime minster had “refused to back his chancellor staying in her job”.

She wrote on X: “The markets are in turmoil and business confidence has crashed, yet the chancellor is nowhere to be seen.”

Shadow Treasury minister Gareth Davies said: “Labour are trying to insist that everything is fine, but the fact that Keir Starmer has repeatedly refused to say whether Rachel Reeves will remain as Chancellor speaks volumes.”

What has happened in the markets?

Mounting market pressure from last week continued to grow on Monday, as government borrowing costs rose to highs not seen in decades and the pound value fell to a near 15-month low.

Not since mid-1998 has long-term borrowing been so expensive for the state. The effective interest rate – known as the gilt yield – on 30-year government debt rose to 5.47% on Monday morning before easing off slightly to 5.4%.

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The benchmark 10-year borrowing cost stayed below the 2008 high recorded last Thursday but at 4.86% remains at levels that had been last recorded around the global financial crash.

The pound, which can reflect investors’ confidence in the UK and overall economic health, dropped to be worth $1.21, a low last recorded in mid-October 2023.

Kathleen Brooks, research director at XTB, said worries over UK government debt levels will not go away until ministers announce measures or spending cuts to address it.

PM doesn’t rule out spending cuts

The prime minister was taking questions after delivering a speech on AI.

Sir Keir said the government would still stick to its “fiscal rules”, including requiring day-to-day spending to be met from revenues rather than further borrowing, despite the market turbulence.

However, he did not answer directly when Sky’s political editor Beth Rigby asked if he will have to implement spending cuts.

He said economic growth is “the number one mission of this government” and that there was flat growth under 14 years of the Conservatives.

Calls for emergency summit

The Lib Dems have urged the chancellor to hold an emergency summit with lenders to reassure mortgage holders.

The party’s Treasury spokesperson Daisy Cooper said the October budget “has not worked” and “many will be worried”.

“Rachel Reeves can no longer sit on her hands as this turmoil threatens to have real consequences for millions of homeowners,” she added.

The Lib Dems, as well as the Tories, had criticised the chancellor for going to China over the weekend instead of staying at home to address the market volatility.

However, Ms Reeves defended the trip, saying building a stronger relationship with the world’s second largest economy was central to her mission for growth.

And she said she would not alter her economic plans, with the October budget designed to return the UK to economic stability.