Rachel Reeves ‘has lost control’ of UK finances – chilling warning spells doom for Labour

Reeves . Why PM Keir Starmer trusted her to run the nation’s accounts is anybody’s guess. It’s backfired horribly.

Reeves inherited a troubled economy but one that had finally started to recover. In the first half of 2024, it was the fastest growing in the G7. Then she applied her death grip.

GDP flatlined the moment Reeves opened her mouth and said the UK had a £22billion “black hole” that could only be closed by taxing the nation silly.

This is another of her legendary lies, by the way. Labour was going to hike taxes anyway, the black hole was merely an excuse.

Reeves then gave the nation four months to fret about what she would tax. Businesses stopped investing and consumers stopped spending as a result.

Her autumn Budget turned out to be even worse than feared, with £40 billion of tax hikes, mostly on businesses, and £30 billion of extra borrowing.

Combined with her spending splurge, this reignited inflation. Consumer price growth had fallen to just 1.7% in September. It’s already back up to 2.6% and is expected to hit 3% or 4% next year.

Playing with inflation is a stupid thing to do when you’ve decided to borrow a staggering £300billion over the next financial year.

High inflation means higher , which means the UK will have to pay billions of pounds extra to service its huge debts.

Reeves deserves zero sympathy. Her arrogance is at the heart of this disaster.

She believed her own hype. Heaven knows, she might even believe her own CV. Nobody else does.

And now she’s lost control.

That’s not me or a rival politician with an axe to grind saying that. It’s a financial professional who just happens to be an expert in the bond market.

Which you’re going to be hearing a lot about over the next few weeks.

The bond market is important because it’s how politicians borrow money to fund government spending.

The Treasury does this by issuing gilts, which pay interest to big institutional investors.

Thanks to Reeves the interest bill is going through the roof. As I warned earlier today, .

The financial professional calling out Reeves is Bryn Jones, head of fixed income at Rathbones Asset Management.

In contrast to Reeves, his financial qualifications can be relied upon. He also knows the bond market inside out.

Jones issued a chilling warning today: “The Government has lost control of borrowing.”

This morning, gilt yields hit the highest rate in the millennium. That’s purely down to Reeves’ staggering mismanagement of the economy.

Inflation is up, mortgages are up, hiring is down, jobs are going, shops are closing, GDP is shrinking and now the pound is falling too.

Credit card rates are the highest ever and more companies are also more likely to default on their debts, Jones says. He adds: “None of this is healthy.”

It certainly isn’t. The Chancellor’s tenure at No. 11 is turning into a slow motion rout.

The only reason the bond market hasn’t finished her off like former PM Liz Truss is that the increase in borrowing costs has been a “slow burn”, Jones says, and “not the total wipe out around Kwasi Kwarteng’s infamous Budget”.

That’s now changing.

Over the weekend, 10-year gilt yields climbed above 4.5%. That’s above the 4.2% .

Yesterday, they hit 4.6%. This morning, they topped 4.7%. As I write, they’ve climbed past 4.8%. This is no longer a slow burn.

If they hit 5% then economic and political hell will break loose.

Jones says in contrast to the Truss and Kwarteng collapse, “no one has put their heads on the blocks yet”. That could change very quickly. Reeves may not survive this. Labour will never be forgiven, just like the weren’t thanks to Liz Truss. Keep watching those yields.