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UK chancellor Rachel Reeves has shrugged off calls for her resignation, insisting to MPs that her economic plans can deliver an “immense” prize and defending her visit to China last week.
In her first House of Commons appearance since market turmoil hit her economic plans last week, Reeves was accused by her Conservative opposite number Mel Stride of being part of a “Shakespearean tragedy”.
Stride said: “To go, or not to go, is now a question.” But Reeves, cheered on by Labour MPs, said she would in the coming weeks set out more details of a plan to revive a stagnating economy.
“If we get it right, the prize on offer to the British public is immense,” she said. Reeves claimed the recent bond market turmoil affecting UK borrowing reflected “global economic uncertainty”.
The chancellor has come under increasing pressure to set out a plan to turn around the economy.
UK borrowing costs have hit a 16-year high amid growing investor fears of stagflation, which refers to a combination of anaemic growth and persistent price pressures.
The strains in the UK market come amid a global sell-off in government bonds in recent weeks, fuelled in part by fears that US president-elect Donald Trump’s proposed tariffs will be inflationary.
The gilts market was stable following the chancellor’s initial remarks, with the 10-year yield flat on the day at 4.88 per cent and well below last week’s post-financial crisis high of 4.93 per cent.
Stride claimed Reeves should have stayed in Britain to reassure the markets instead of going to China “with a begging bowl”. The chancellor said building business ties with Beijing was essential.
“Not engaging is not an option,” Reeves said, although she added that she had raised questions of human rights with the Chinese leaders and denounced “completely unfounded sanctions on British parliamentarians”.
Reeves’ statement came amid growing unrest among Labour MPs about the chancellor’s handling of the economy, with many still deeply unhappy about her decision last year to scrap winter fuel payments for 10mn pensioners.
On Monday, Number 10 took the unusual step of announcing that UK Prime Minister Sir Keir Starmer expected Reeves to continue in her role until the election, just hours after He refused to give such an assurance.
One newly elected Labour MP said: “Some people are looking at the polls and worrying about their seats. There’s a danger Rachel Reeves becomes a lightning rod for what has been going wrong, but I don’t think we’re at that stage yet.”