Market Turmoil Fuels Doubts Over Chancellor Rachel Reeves' Future

Politics Nouvelles

Market Turmoil Fuels Doubts Over Chancellor Rachel Reeves' Future
Rachel ReevesChancellorLabour Party

The embattled Chancellor faces mounting pressure as the pound plunges to a 14-month low and government borrowing costs soar. Labour leader's wavering support adds to the uncertainty surrounding her position, raising questions about the Government's ability to navigate the economic crisis.

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Rachel Reeves is scheduled to attend a Cabinet meeting at Downing Street on Tuesday amidst escalating market turmoil and growing concerns about her position as Chancellor. The embattled Chancellor's future has been called into question after Sir Keir Starmer appeared to withdraw his unconditional support for her, expressing confidence in her capabilities but pointedly declining to guarantee she would remain in her post until the next general election.

Hours later, Downing Street attempted to quell speculation, stating that Ms. Reeves would remain Chancellor for “the whole of this Parliament.”\The Chancellor returned from a trip to China to face fresh questions regarding the Government's ability to adhere to its own fiscal rules, amid rising borrowing costs and fears of economic stagnation. 'Either he ties his hands and keeps her into 2029, or he opens speculation as to her position. Unfortunately, Starmer seems to have bungled it and done both at the same time,' Simon Finkelstein, a former special adviser to Jeremy Hunt and Dominic Raab, told LBC's Nick Ferrari at Breakfast. 'It's worth reflecting how remarkable, since July, the election in which Rachel Reeves admittedly was very, very critical to, and the economic strategy that got them elected, they were already speculating over her future. So it's a really remarkable state of affairs,' he told LBC. \The pound sank to a fresh 14-month low on Monday, at 1.21 dollars. It regained some ground later in trading but still finished 0.3% lower at 1.216 when London's markets closed. UK government bonds - also known as gilts - saw 10-year yields climb to fresh highs not witnessed since 2008. They were five basis points higher at 4.89% at the end of trading. Longer-term borrowing costs were also elevated, with the yield on 30-year gilts up three basis points at 5.45%, after reaching its highest level for 27 years earlier on Monday. Rising yields, which move inversely to bond prices, signal investors’ declining willingness to hold UK debt – a warning sign that the Government is grappling with a credibility crisis. Sir Keir Starmer has moved to bolster the No 10 policy unit, enlisting Olaf Henricson-Bell, a former Treasury communications chief under three Conservative chancellors, to lend his expertise. But insiders suggest more concrete action may be required to reinforce market confidence. Speaking to LBC's Nick Ferrari at Breakfast, Mr. Finkelstein suggested that Ms. Reeves is likely to survive, for now: “If I was a betting man, I’d say Rachel Reeves lasts the distance. Otherwise, Keir Starmer has a Liz Truss problem. As soon as you get rid of your Chancellor, the focus immediately shifts onto you. This wasn’t simply a budget made in the Treasury – it was signed off by Downing Street. 'That said, we’re likely to see serious spending cuts in March’s Budget if the Chancellor is to meet her fiscal rules.

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