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Sir Keir Starmer has said the Treasury will be “ruthless” in cutting government spending as market turbulence continues.

Responding to a question about the economic situation from Sky News’ political editor Beth Rigby, he said: “The number one mission of this government is economic growth.

“And that was run through the budget, but there’s much more that we’re doing on economic growth, pulling those levers of change.”

Both long-term 30-year and the benchmark 10-year government borrowing costs were up on Monday morning, with the 30-year effective interest rate (the gilt yield) reaching a new high of 5.47% – a rate not seen since mid-1998.

The 10-year borrowing cost reached 4.86%, below the 2008 high recorded last Thursday but at the same levels last seen around the global financial crash.

Politics latest: Chancellor urged to hold emergency bank summit

That pushes up costs for the government, with the chancellor put in a position where she could have to break her self-imposed fiscal rules by failing to bring debt down and balance the budget.

More on Rachel Reeves

Sterling, which can reflect investors’ confidence in the UK and overall economic health, was also down to a low not seen since October 2023, with £1 buying $1.21.

Money blog: Traders bet on pound dropping 8%

The dismal economic outlook has prompted warnings mortgage rates could rise in the coming weeks as lenders respond to the turmoil.

In what could be seen as further misery for the British people, the prime minister refused to rule out government spending cuts as he said the Treasury was right to be “ruthless” in cutting spending.

A spending review, due later this year, is expected to require government departments to make efficiency savings worth 5% of their budgets.

Sir Keir told a news conference: “We will be ruthless, as we have been ruthless in the decisions that we’ve taken so far.

“We’ve got clear fiscal rules, and we’re going to keep to those fiscal rules.”

He said the government had “inherited a real mess” of an economy from the Conservative government.

But, he said the government is “going to stick to the fiscal rules”.

“That is a very important thing,” he said.

“We’re determined to bring about that economic stability. And that’s why the fiscal rules are absolutely, absolutely central to what we do.”

Read more:
Rachel Reeves facing pressure but people should give her more time, Wes Streeting says
Former PM says Reeves has been ‘rumbled’ by market turmoil

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Why is the UK economy in big trouble?

Sir Keir also twice avoided answering whether Rachel Reeves will still be chancellor by the next election in 2029 in the wake of the dismal economic outlook.

“Rachel Reeves is doing a fantastic job,” he said, but would not say if she would remain in post.

“She has my full confidence, she has the full confidence of the entire party.

“She took the tough decisions.”

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Chancellor’s ‘pragmatic’ approach to China

The Conservatives jumped on Sir Keir failing to confirm if Ms Reeves would still be in the job at the end of this parliament.

Leader Kemi Badenoch said: “The prime minister just refused to back his chancellor staying in her job.

“Keir Starmer and Rachel Reeves have driven Britain’s economy into the ground. The markets are in turmoil and business confidence has crashed, yet the chancellor is nowhere to be seen.

“Labour promised stability and instead the City minister is mired in corruption investigations and the chancellor is hanging on by her fingernails.”

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PM faces threat of major rebellion during key vote today

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PM faces threat of major rebellion during key vote today

Sir Keir Starmer continues to face the threat of a major rebellion during a key vote on welfare reforms later – despite making last-minute concessions to disgruntled Labour MPs.

Work and Pensions Secretary Liz Kendall has confirmed that all existing claimants of the personal independence payment (PIP), the main disability benefit, will be protected from changes to eligibility.

The combined value of the standard Universal Credit allowance and the health top-up will rise “at least in line with inflation” every year of this parliament.

And an additional £300m for employment support for sick and disabled people in 2026 has been announced, which will rise every year after.

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Welfare cuts ‘needed to be made’

Ms Kendall has also promised that a consultation into PIP – “co-produced” with disabled people – will be published next autumn.

She said the U-turn on welfare cuts will cost taxpayers about £2.5bn by 2030 – less than half the £4.8bn the government had expected to save with its initial proposals.

Modelling by Ms Kendall’s own department, released yesterday, suggested the proposals would push 150,000 more people into poverty by 2030, down from the 250,000 estimated under the original plan.

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But after announcing the U-turns, Labour MPs were still publicly saying they could not back the plans as they do not go far enough to allay their concerns.

Disabilities minister Stephen Timms would not say he was “confident” the proposals would pass the Commons when asked on Sky News’ Politics Hub with Sophy Ridge.

“We’ve got a very strong package, I certainly hope it passes,” he replied.

Read more: What are the concessions to the welfare reform bill?

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‘Disabled people thrown under the bus’

A total of 86 charities united yesterday to call on MPs to reject the reforms, saying they will harm disabled people and calling it “a political choice”.

The likes of Oxfam, Child Action Poverty Group, Mind and Shelter said the bill has been brought to a vote without consulting disabled people and without any assessment “of its impact on health and employment outcomes”.

When asked to name “a single” disability organisation in favour of the reforms, Ms Kendall declined to do so.

Several Labour MPs indicated they would still vote against the changes, leaving the government in the dark over how big a rebellion it still may face.

Ms Kendall tried to allay their fears, telling MPs: “I believe we have a fair package, a package that protects existing claimants because they’ve come to rely on that support.”

Richard Burgon presented a petition to parliament yesterday evening against the cuts, signed by more than 77,000 people.

Several Labour MPs questioned why the vote was going ahead before the review into PIP is published – including Rachael Maskell, who said she could not “countenance sick and disabled people being denied support” and added: “It is a matter of conscience.”

Connor Naismith said the concessions “undoubtedly improve efforts to secure welfare reform which is fair”, but added: “Unfortunately, I do not believe these concessions yet go far enough.”

Nadia Whittome
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Labour rebel Nadia Whittome said the government was ‘ignoring’ disabled people

Nadia Whittome accused the government of “ignoring” disabled people and urged ministers to go “back to the drawing board”.

Ian Byrne told the Commons he will vote against the “cruel cuts” to disability benefits because the “so-called concessions go nowhere near far enough”.

The vote will take place this evening, with coverage on Sky News’ Politics Hub live blog and on TV.

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Circle applies for US trust bank charter to manage its USDC reserve

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Circle applies for US trust bank charter to manage its USDC reserve

Circle applies for US trust bank charter to manage its USDC reserve

Other crypto firms are also reportedly considering applying for a national bank charter, following in the footsteps of Anchorage Digital Bank, which received a license in 2021.

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US Supreme Court will not review IRS case involving Coinbase user data

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US Supreme Court will not review IRS case involving Coinbase user data

US Supreme Court will not review IRS case involving Coinbase user data

A lower court ruling will stand in a case involving a Coinbase user who filed a lawsuit against the IRS after the crypto exchange turned over transaction data.

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