Rachel Reeves reeling ‘under pressure’ as UK economy flatlines

Rachel Reeves is “under pressure”, according to Cabinet Minister Wes Streeting, as criticism over the economy and her trip to China mounts.

Meanwhile, Equalities Minister Annelise Dodds was also forced to defend the architect of Labour’s economic strategy, insisting she had “confidence” in her plan.

Health Secretary Mr Streeting, speaking at the Jewish Labour Movement’s annual conference in North , said: “I think people continue to underestimate both the amount of heavy lifting she has had to do in her first six months and the amount of heavy lifting she will have to do in her next six months.

“And the cabinet doesn’t underestimate that – we understand the choices she has to make, the pressure she is under.”

Mr Streeting continued that he and all his colleagues “have a responsibility” to both “make tough choices and drive reform and value for money” within their departments and “be drivers of economic growth.”

He said: “Nothing in the last six months has shaken my conviction that economic growth is the number one priority.”

Mr Streeting also argued that Ms Reeves was “trying to break us out of what has been the status quo and the economic orthodoxy of more than a decade”.

He added: “People need to give her time, and they need to not forget that, without [Sir ‘s] leadership, certainly we wouldn’t have won the last general election.

“Without Rachel’s leadership, we wouldn’t have won the last general election either. She built Labour’s economic credibility out of the ashes they were left in after the Corbyn leadership. And she has built that trust, built up that plan, and now she’s following through.”

Mr Streeting insisted that he had “total confidence in the leadership that Rachel’s providing, and the leadership that the cabinet is following and driving with her, because all of us have to deliver economic growth for our country”.

Ms Dodds, speaking at the same event, also addressed the question of how much fiscal headroom – the amount of flexibility or leeway a government has within its budget to increase spending, cut taxes, or take on additional borrowing without breaching its self-imposed fiscal rules or targets.

She said: “We have to focus on actually the evidence.

“And when we look at the evidence, we can see that the UK government has a chancellor who is very clear about the long-term plan for our country. She’s been delivering on it.

“I think it’s really important for us to focus on those fundamentals, on what has been achieved in a very short space of time. And I’m confident in that long-term plan that Rachel has been setting out.

“And we can already see the benefit of that, frankly, in terms of the UK’s reputation when it comes to public finances, but economic management more generally. Certainly, that’s what I’ve heard internationally and keep hearing just now.”

Yields on 10-year gilts hit the highest point since 2008 on Thursday, at 4.89%.

It remained elevated throughout Friday but did not surpass Thursday’s peak. It ended the day about three basis points higher, at 4.84%.

With more money being spent on servicing government debt, the Chancellor faces the prospect of increasing taxes or implementing deeper spending cuts than planned if she is to keep to the rules she set herself in October.

During a weekend trip to China, Ms Reeves insisted her fiscal rules were “non-negotiable” and said she would “take action” if necessary to ensure they were met.

A survey of UK chief financial officers (CFOs) by consultancy Deloitte found a net 26% felt more pessimistic about their businesses than they did three months ago.

The figure, based on a quarterly survey carried out in December, is the first time CFOs have felt more pessimistic than optimistic since June 2023, just before the UK slipped into recession.

However, sentiment is still well above the lows seen during the -19 pandemic and in 2022 during Liz Truss’s brief time in Downing Street.