Being associated with market turmoil may not be the only inauspicious burden that Britain’s chancellor of the exchequer, Rachel Reeves, shares with former prime minister, Liz Truss.
The Daily Star newspaper launched one of Britain’s most notorious political stunts in recent years when it mocked up Truss as iceberg lettuce and asked readers whether she could outlast the vegetable in office. Infamously, the lettuce won, as Truss quit six days later after bond markets turned on her government.
Reeves may have groaned when she saw the Daily Star’s latest front page on Tuesday. It pictured a lettuce mocked up with her distinctive bob hairstyle. “Should we be popping out for another lettuce?” the headline asked.
The tabloid noted ironically that prime minister Keir Starmer had given his “full backing” to the chancellor, who is under pressure after skittishness from bond investors once again overshadowed the government’s agenda.
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“Uh oh,” wrote James Caven, a Star journalist.
Reeves is still some way from the politically terminal position occupied by Truss, who had the shortest premiership in British history after trying to implement £45 billion of unfunded tax cuts that sparked panic among investors and sent bond prices soaring and the value of sterling into free fall.
But the mere fact that the chancellor could be mocked in such a merciless way six months after taking office illustrates the pressure she is under as, once again, a sell-off of sterling and UK government bonds ensues following fiscal decisions. Britain’s economy is struggling for growth and many investors and businesses believe the £40 billion of tax rises in her October budget have made things much worse for the economy.
The Labour chancellor, meanwhile, insists the budget was the first step in a painful process to bring back “stability” to the UK’s national finances. Yet the political strain Reeves is under forced her to make a statement on Tuesday afternoon to the House of Commons in which she defended her decision last week to go on a trade mission for financial services to China while, in her wake, the bond markets hammered British assets.
Mel Stride, the shadow chancellor, suggested his opposite number at the head of the treasury should be sacked by prime minister Keir Starmer and that the “drums are beating ever closer”.
“To go or not to go,” said Stride. “That is a question. The prime minister will be damned if he does but, surely, he will be damned if he does not. The British people deserve better.”
In a pugnacious turn at the despatch box that belied her beleaguered position, Reeves reminded Stride that he served in an economic portfolio on Truss’s front bench when her government tried to implement its fatal mini-budget.
Indirectly acknowledging the comparisons between her and Truss, Reeves also chided the former prime minister who recently sent a solicitors letter to Starmer for repeatedly accusing her of “crashing the economy”. That line may only work, however, so long as Reeves and Starmer can fend off accusations of doing the same.
Whatever about the economic wisdom of her tax rises, Reeves appeared to be on firmer ground as she rejected Tory suggestions that she should not have gone to China, the second largest economy in the world.
Labour has bet the farm, and practically everything else, on spurring growth in the economy. The party needs the expansion to pay for better public services that it hopes will save it from the political ignominy of just a single term in office following its landslide election in July, which somehow seems even further away.
“Growth is our number one mission. Not engaging [with China] is not an option,” said Reeves. “If we get it right, the prize is immense.”
Rumours swirled among some in Westminster in recent days that Reeves could be kept in place until her spring statement or perhaps her June spending review. After that, the conspirators whisper, she may be ditched by Starmer. Many others, however, consider such a prospect unlikely.
Starmer is not squeamish about ditching colleagues when it suits him. In November, he quickly dispensed with transport secretary Louise Haigh after it was revealed she had a fraud-related conviction over the incorrect reporting of a mobile phone theft over a decade ago.
Meanwhile, Tulip Siddiq, a junior minister in the treasury resigned following allegations that her family was embroiled in a corruption scandal in her ancestral home of Bangladesh.
The situation with Reeves appears to be much different. She seems likely to retain the prime minister’s backing unless the situation with the bond markets spirals into a full-blown crisis and a change of political course becomes unavoidable. Until that prospect looms into view, the Star might be better off staying out of grocery shops.