Rachel Reeves is coming out fighting as she prepares to unveil billions in cuts
In recent months, the chancellor has become a lightning rod for criticism.
She been accused of ushering in a new era of austerity and channelling George Osborne with governments cuts to welfare, winter fuel and international aid.
She’s been described as a new Liz Truss, with her focus on growth and tearing up regulation.
She’s been urged to hike taxes for the wealthy by left-wing Labour MPs.
She’s been under pressure to loosen her self-imposed fiscal rules – even Lord Blunkett, the former Labour home secretary, has called on her to allow more government borrowing.
As for the Tories, they claim she’s facing a crisis of her own making after trash-talking the economy and damaging business confidence by hiking national insurance on employers.
But if the pressure is taking its toll on Rachel Reeves, it didn’t show this morning.
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‘Living standards will increase’
She breezed into the Sky News Westminster studio for her interview on Sunday Morning With Trevor Phillips and positively beamed when he asked about the Office for Budget Responsibility (OBR) preparing to slash its growth forecasts, reportedly by as much as half, and the severity of the country’s financial situation.
She insisted the “world has changed” since her October budget and said the government is responding through greater investment in defence and security.
The chancellor has clearly decided to come out fighting.
She’s wedded to her fiscal rules, she’s sticking to her promise not to cut taxes, and determinedly standing by the decisions she took in the October budget.
“I promised at the general election to bring stability back to the economy – and as a result of that stability, interest rates have been cut three times since the general election,” she said.
“That’s only been possible because we put our public finances on a firm footing, and we’ve also put our public services on a firm footing.”
There was no real acknowledgement that cuts in interest rates have now stalled and economic growth is flatlining.
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What to expect from the spring statement
She brushed off the prospect of a more negative outlook by deferring again and again to the as-yet-unpublished OBR forecast.
“I know that we need to go further and faster in delivering economic growth and seeing public services improve – but there are no shortcuts here,” she said. “It’s not possible within just a few months to reverse more than a decade of economic stagnation, but we are making the changes that are necessary to bring money into the economy.”
The chancellor will deliver the spring statement on Wednesday. Pic: PA
It’s clearly part of the chancellor’s job to talk up the economy they’re responsible for. But the strategy here was to show no hint of weakness.
The spring statement is already done and dusted as it had to be submitted to the OBR last week for its forecasts to be prepared and printed.
So there’s no way back now on the likely cuts to come.
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We’re expecting the chancellor to set out savings of around £10bn, including the £5bn of welfare savings announced last week.
Today she confirmed the civil service will be forced to cut £2bn a year by slashing administration costs by the end of the decade – although the savings will be used to protect frontline services from cutbacks.
She told me people who were describing the event as an emergency budget – which implies tax changes – are going to look “very silly” when they hear what she’s got to say on Wednesday.
That’s a dig at shadow chancellor Mel Stride and the Tories, who’ve been doing their best to make the “emergency budget” moniker stick.
Read more:
Spring statement – what you need to know
Benefits system changes explained
You’d think they might want to avoid reminding people of the last emergency budget, which was Jeremy Hunt’s effort to clean up the shrapnel left behind by Liz Truss’s mini budget implosion.
But for Rachel Reeves, it’s an ever-present reminder of what can go wrong.
Billionaire investor Elon Musk has sold his social media platform X to his AI startup xAI, sparking controversy as it coincides with a US judge rejecting his bid to dismiss a lawsuit tied to the social media platform.
The transfer of ownership of X to xAI on March 28 means that the class-action lawsuit against Musk — accusing him of defrauding former Twitter shareholders by delaying the disclosure of his initial investment in the social media platform — has become “a whole lot spicer,” Cinneamhain Ventures partner Adam Cochran said in a March 28 X post.
Acquisition may open up xAI to more ‘exposure’
On the same day that Musk said “xAI has acquired X in an all-stock transaction,” a US judge reportedly rejected Musk’s attempt to dismiss the lawsuit. Cochran said it has “opened up his AI entity to exposure here too, and it’s a much bigger pie.”
Source: Grok
Musk said the deal values xAI at $80 billion and X at $33 billion, factoring in $12 billion in debt from the $45 billion valuation. He originally bought X, formerly Twitter, for around $44 billion in April 2022.
“xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent,” Musk said.
Source: Bryan Rosenblatt
“This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach,” he said, adding:
“This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.”
However, Cochran claimed that “Musk used his pumped up xAI stock to pay multiple times over value for X, but still take an $11B loss on the transaction.” He said that Musk is “screwing over xAI investors, and X investors” and was executed to sell user data to xAI.
Related: Elon Musk’s ‘government efficiency’ team turns its sights to SEC — Report
xAI is best known for its AI chatbot “Grok” which is built into the X platform. When Musk released it in November 2023, he claimed it could outperform OpenAI’s first iteration of ChatGPT in several academic tests.
Source: Raoul Pal
Musk explained at the time that the motivation behind building Grok is to create AI tools equipped to assist humanity by empowering research and innovation.
While Cochran said that Grok being valued at $80 billion is an “insanely dumb valuation,” crypto developer “Keef” disagrees. Keef said, “This is shady all around, but given the day, Grok is genuinely probably the top model for various tasks.”
Magazine: Arbitrum co-founder skeptical of move to based and native rollups: Steven Goldfeder
Five Democratic lawmakers in the US Senate have called on leadership at regulatory agencies to consider the potential conflicts of interest from a stablecoin launched by World Liberty Financial (WLFI), the crypto firm backed by US President Donald Trump’s family.
In a March 28 letter from the US Senate Banking Committee, Massachusetts Senator Elizabeth Warren and four other Democrats asked the Federal Reserve’s committee chair on supervision and regulation, Michelle Bowman, and acting comptroller of the currency, Rodney Hood, how they intended to regulate WLFI and its stablecoin, USD1.
March 28 letter from five Democratic senators to OCC, Fed leadership. Source: US Senate Banking Committee
The letter came as members of Congress are considering legislation to regulate stablecoins through the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act. The bill, if signed into law, would essentially allow the Office of the Comptroller of the Currency (OCC) and Federal Reserve to oversee stablecoin regulation, including for issuers like WLFI and its USD1 coin.
Trump also signed an executive order in February attempting to have all federal agencies — purportedly including the OCC — “regularly consult with and coordinate policies and priorities” with White House officials, giving the US president unprecedented control.
“President Trump’s involvement in this venture, as he strips financial regulators of their independence and Congress simultaneously considers stablecoin legislation, presents an extraordinary conflict of interest that could create unprecedented risks to our financial system and to the integrity of decisions made by the [Fed and OCC],” said the letter, adding:
“The launch of a stablecoin directly tied to a sitting President who stands to benefit financially from the stablecoin’s success presents unprecedented risks to our financial system.”
Related: Trump’s USD1 stablecoin deepens concerns over conflicts of interest
Since World Liberty launched in September 2024 — months before the US election and Trump’s inauguration — many of the firm’s goals have been shrouded in secrecy. The project’s website notes that Trump and some of his family members control 60% of the company’s equity interests.
As of March 14, World Liberty had completed two public token sales, netting the company a combined $550 million. On March 24, the project confirmed launching its first stablecoin on the BNB Chain and Ethereum. The president’s son, Donald Trump Jr., also pitched USD1 from the DC Blockchain Summit on March 26 with three of WLFI’s co-founders.
Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions
The Federal Deposit Insurance Corporation (FDIC) said in a March 28 letter that institutions under its oversight, including banks, can now engage in crypto-related activities without prior approval. The announcement comes as the Commodity Futures Trading Commission (CFTC) announced that digital asset derivatives wouldn’t be treated differently than any other derivatives.
The FDIC letter rescinds a previous instruction under former US President Joe Biden’s administration that required institutions to notify the agency before engaging in crypto-related activities. According to the FDIC’s definition:
”Crypto-related activities include, but are not limited to, acting as crypto-asset custodians; maintaining stablecoin reserves; issuing crypto and other digital assets; acting as market makers or exchange or redemption agents; participating in blockchain- and distributed ledger-based settlement or payment systems, including performing node functions; as well as related activities such as finder activities and lending.”
FDIC-supervised institutions should consider associated risks when engaging in crypto-related activities, it said. These risks include market and liquidity risks, operational and cybersecurity risks, consumer protection requirements, and Anti-Money Laundering requirements.
On March 25, the FDIC eliminated the “reputational risk” category from bank exams, opening a path for banks to work with digital assets. Reputational risk is a term that underscores the dangers banks face when engaging with certain industries.
Related: FDIC resists transparency on Operation Chokepoint 2.0 — Coinbase CLO
Digital asset derivatives won’t be treated differently — CFTC
While the US crypto derivatives market had been a gray zone due to regulatory uncertainty, that has been changing. On March 28, the CFTC withdrew a staff advisory letter to ensure that digital asset derivatives — a type of trading product — will not be treated differently from other types of derivatives. The revision is “effective immediately.”
The change in tone from the CFTC and FDIC follows a new environment for crypto firms under US President Donald Trump’s administration. Trump has vowed to make the US “the crypto capital of the planet.”
Crypto firms are shifting strategies to align with the easing regulatory climate. On March 10, Coinbase announced the offer of 24/7 Bitcoin (BTC) and Ether (ETH) futures. In addition, the company is reportedly planning to acquire Derebit, a crypto derivatives exchange.
Kraken, another US-based cryptocurrency exchange, has also made moves in the derivatives market. On March 20, it announced the acquisition of NinjaTrader, which would allow the exchange to offer crypto futures and derivatives in the United States.
Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions
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