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The Chancellor of Great Britain of the Rachel Reeves hacienda and the Secretary of Defense of Great Britain, John Healey, visit Wellington Barracks, in downtown London, on March 26, 2025.
Stefan Rousseau | AFP | Getty images
All eyes are now in the ruler Labor Party of the United Kingdom for any sign of more political fractures that could shake the economic stability of Great Britain, after the extraordinary vision of the country’s finance minister that cries in Parliament on Wednesday.
The yields of the bonds of the United Kingdom fired and the pound sank against the dollar and the euro When Prime Minister Keir Starmer failed to support Foreign Minister Rachel Reeves during a question and answer session in the House of Commons. The tears fell down Reeves during the heated parliamentary debate, while Starmer seemed unconscious of his anguish behind him.
Market movements were abrupt, since merchants speculated that Reeves could be about to lose their job or potentially give up, taking its strict “fiscal rules” on spending and loan with him.
“There are many eyes in the United Kingdom,” said Simon Pittaway, a senior economist of the Resolution Foundation, to CNBC as the drama took place on Wednesday.
“When it comes to the (next) autumn budget, whoever the chancellor will have some really difficult decisions to make. And I think that, in regard, to stick to the existing fiscal rules, it is really crucial, that is a movement that would indicate a kind of credibility and confidence for the market” at the time when the country is under the great scrutiny, he said in the great scrutiny of CNBC.
“To stick to these fiscal rules, and depending on the priorities of the Government, a combination of higher taxes and a lower expense, towards the end of the forecast period it could be the way to follow,” said Pittaway.
The government fought against the calm of the situation in the midst of market tumult, with a spokesman attributed to the anguish of Reeves to a “personal matter” without commenting more. The prime minister then told the BBC that He and the chancellor were “in Lockstep” and that he backed her completely.
Comments seemed to placate the markets, with London Ftse 100 Approximately 0.5% in the first agreements on Thursday morning, with the highest British pound against the euro and the dollar. The 10 -year reference bonds of the United Kingdom, known as DIRES, decreased 6 basic points.
‘Say Strait’
Reeves has had sustained pressure since the last autumn budget, during which it revealed a massive impulse to public spending that would be largely funded by a large increase in taxes on British companies and employers.
He also said that he would implement two fiscal rules to control debt and loans from the United Kingdom under control: first, that daily government spending will be financed by fiscal income and not by loans, and, secondly, that public debt will fall as a part of economic production by 2029-30.
British Prime Minister Keir Starmer (L) and Foreign Minister Rachel Reeves (R) drink tea during a visit to local companies on September 26, 2021.
Justin Tallis | AFP | Getty images
However, the rules gave Reeves to a small fiscal “space for the head, and the small margin margin that has been eroded by the Government by rowing the well -being expenses cuts in recent months.
After another government’s U turn this week, this time in disability benefits, Reeves now must find savings elsewhere, Tricky, when he has just announced a massive public expenses plans – Break your loan rules or go against the promises of the labor campaign and increase workers’ taxes at the end of this year.
At a broader level, after the last rise against well -being, the leadership of the Labor Party will now have to fight with a rebel group of Backbench legislators who will feel emboldened to challenge the government on other reforms and cuts of potentially controversial expenses.
“The nature of what happened in the last 48 hours, with the Government’s Welfare Law, means that the government’s political and economic strategy is in an absolutely terrible narrow at this time,” said Max Wilson, director of Public Affairs of Whitehouse Communications, on Thursday.
The government meets “so little margin of maneuver” due to its political decisions and concessions prior to the backbenchers, Wilson said.
“Financially, economically, there is very little they can do, and Rachel Reeves has such a difficult job in their hands now, finding extra money without resorting to other actions that will alter markets, including more loans or tax increase, so, in reality, I think the government went in an absolute link here,” he said.
