LONDON — British Prime Minister Keir Starmer has confirmed the stability of Treasury Chief Rachel Reeves’ role following several government policy reversals that have undermined financial strategies and raised questions about her position.
Speculation intensified after Reeves appeared visibly distressed in Parliament, the day following a government’s unexpected withdrawal from plans to reduce welfare expenditures. Observers noted how Reeves seemed both weary and troubled while positioned behind Starmer during his regular address at the Prime Minister’s Questions session.
The Treasury noted that Reeves was addressing a “personal matter,” though details were not provided.
Initially, Starmer dodged a direct response to opposition queries about whether Reeves would maintain her position through to the anticipated 2029 election.
Market uncertainty regarding her status and fiscal strategies saw the pound decrease in value against the U.S. dollar, alongside a rise in government borrowing costs.
Following these events, Starmer’s press secretary reaffirmed that Reeves “is going nowhere,” emphasizing his complete support for her. Starmer assured that Reeves will continue as Chancellor of the Exchequer for the foreseeable future.
Starmer further praised Reeves’ performance, highlighting significant international investments secured under her tenure in an interview.
The tears shed by Reeves were said to be unrelated to political issues, according to Starmer.
The government is currently attempting to stabilize the situation following recent turmoil, including adjustments to planned welfare spending cuts to appease dissent within Starmer’s party ranks.
The bill, albeit in a compromised format, passed its preliminary hurdle in the House of Commons on Tuesday, following concessions made by the government to pacify Labour Party dissenters concerning benefits for disabled individuals. Still, 49 Labour members opposed the bill.
This development poses a significant challenge to Starmer’s leadership, coinciding with nearly a year since his election, as he confronts a sluggish economy and low approval ratings.
Furthermore, these changes leave a fiscal gap, possibly leading to future tax hikes despite prior commitments not to increase major taxes like income or sales tax.
Original reforms were projected to save approximately £5 billion annually, yet after amendments, potential savings remain uncertain.
Earlier in May, go back plans were abandoned to cease winter heating allowances for millions of retirees, initially considered a revenue source by Reeves.
Starmer, since taking office in July 2024, where his centre-left party secured a majority of seats, has faced numerous challenges. While receiving kudos globally for rallying support for Ukraine and negotiating favorable trade terms with U.S. President Donald Trump, domestic issues like persistent inflation and sluggish economic growth have hindered efforts to mitigate living costs.