Chancellor has been accused of “losing the plot” by a fellow Cabinet minister after she demanded colleagues come up with ideas to help reverse this week’s economic turmoil.
In a panicked request to secretaries of state, Ms Reeves has asked them to come up with new plans to boost growth amid fears she is now on course to breach her own fiscal rules.
Lack of confidence in the market about future growth has been a core driver in , which is driving up the cost of borrowing and has almost completely wiped out Ms Reeves’ so-called ‘headroom’.
Her first Budget last year left just over £9 billion of headroom, but with her pledge to eliminate the deficit by the next election she is now on course to raise taxes even further or implement swinging cuts.
With Rachel Reeves now planning on making a “significant speech” on growth to reassure international investors, she has reportedly told ministers to come up with new plans to boost growth.
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Rachel Reeves is demanding colleagues come up with ideas (Image: Getty)
In a strategy echoing Liz Truss’, Labour ministers have also been told to “cease anti-growth measures” in their departments.
However the Chancellor is now under fire, with Cabinet colleagues briefing the Times that she’s “lost the plot”, and a second comparing her current predicament to that of Denis Healey’s during the 1976 IMF crisis.
The Treasury made a rare intervention this week, insisting that Rachel Reeves would not repeat the tax hikes seen in her first Budget, implying that future pain will be felt with spending cuts.
Labour is now panicking that further market turmoil will not only derail their strategy and credibility, but could hike rates as well.
The Chancellor is also under fire for jetting off to Communist China, which the government insists is essential as part of their economic growth plan.
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Rachel Reeves Budget has crashed market confidence in the UK economy (Image: HMT Flickr)
However the slammed her for going ‘missing in action’ despite the “economic mess of their own making”.
Online trader Kathleen Brooks now says that the economy is in a “perilous” position.
She tells The Times: “The chancellor is expected to make a speech in the coming days, where she may focus on public sector spending cuts rather than further tax increases to meet her fiscal rules.”
“However, the rhetoric from the Labour government is one reason we are in this mess in the first place, and there are no guarantees that Reeves will be able to calm the market.”
This morning international banking consultant Bob Lyddon told the Express that a recession is now “all but inevitable”.
Tory Shadow Chancellor Mel Stride said in the Commons yesterday: “Labour has been forced to make a panicked attempt to reassure the markets on the economic mess of their own making.”
“But Rachel Reeves is missing in action – instead wheeling out her deputy to defend her loss of control of the public finances.
“The Chancellor should now cancel her travel and focus on this country instead.”