Chancellor Rachel Reeves insists her economic plans will deliver “immense” benefits for the UK, despite growing unrest within Labour

Chancellor Rachel Reeves has rejected calls for her resignation, defending her economic strategies amidst growing market turmoil and increasing criticism from within her own party. Speaking in the House of Commons, Reeves reassured MPs that her plans could bring substantial rewards for the UK’s stagnating economy, but her remarks came under heavy scrutiny from political opponents.

Reeves, in her first appearance since the recent market turbulence, faced pointed remarks from Conservative MP Mel Stride, who dubbed the situation a “Shakespearean tragedy” and mocked her trip to China. While Stride questioned the wisdom of the visit, suggesting Reeves had gone “with a begging bowl,” the Chancellor stressed the importance of building business ties with China for long-term growth, despite concerns over human rights issues raised during her trip.

The economic situation has become increasingly precarious, with UK borrowing costs rising to a 16-year high amidst fears of stagflation, a toxic mix of stagnant growth and high inflation. Reeves, however, remained steadfast in her commitment to her fiscal rules, insisting that she would not be forced into making cuts to public spending.

Within her own party, frustration is mounting over the economic direction. Many Labour MPs have expressed concerns about Reeves’ decision to scrap winter fuel payments for pensioners, and the lack of clarity surrounding the party’s plan to improve living standards in the short term. Despite this, some Labour figures continue to support Reeves, with one MP suggesting that Prime Minister Keir Starmer could not afford to lose her from the Treasury team.

Starmer has been bolstering his economic team with new appointments, including Michael Ellam as his principal adviser on international economic issues, a move seen as an effort to counterbalance the Treasury’s influence. Yet, many MPs believe that the government must do more to explain and reassure the public about its policies, particularly regarding the UK’s vulnerability in the bond markets.

The pound’s decline and the growing concerns in the bond market reflect investor uncertainty, as the UK faces pressure to demonstrate economic stability. Analysts have warned that while Reeves’ statements may offer some reassurance, they will need to be backed by concrete policies to restore investor confidence.