Britain’s finance minister Rachel Reeves — who risks being replaced next week once Andy Burnham becomes prime minister — stressed the need for stability in the public finances and defended her past decisions in a major speech on Tuesday.
Reeves said Britain’s economy was strong because of choices she had made since the Labour Party came to power under Keir Starmer two years ago, adding that there had been progress in delivering on promises of change.
“Hard-won credibility must be sustained and the foundations maintained if this work of radical change is to continue,” Reeves said in her annual Mansion House speech to the finance industry, which focused heavily on what she saw as her achievements in office.
Burnham is expected to be formally announced as Labour leader on Friday and will be officially named as prime minister on July 20.
The former Greater Manchester mayor has set out ambitions to spur “good growth in every postcode” — a goal for which Reeves said she had already laid the foundations — accelerate the decentralising of power away from London and increase the stock of social housing.
Burnham has said his plans will stay within the existing fiscal rules set out by Reeves and his party’s 2024 election manifesto that ruled out tax hikes on working people.
Britain’s economic performance under Reeves fell short of early hopes to “kickstart” economic growth, although it has outpaced European counterparts in the Group of Seven advanced economies since mid-2024, while lagging behind the U.S. and Canada.
Any successor to Reeves looks unlikely to have an easier task. A weakening growth outlook and rising inflationary pressure, the latter compounded by renewed conflict in the Middle East, are weighing on the public finances.
British government borrowing costs hit their highest since May on Tuesday after oil prices rose on Middle East tensions and £4.75 billion ($6.36 billion) of long-dated bonds sold with the highest inflation-adjusted yield in over 20 years.
“The resumption of hostilities in the Middle East in the last few days has shown that our economic resilience will continue to be tested and the market response to those changes shows that there is still work to do to insure our economy and our country against a volatile global landscape,” Reeves said.
Reeves also reasserted her belief in building a much deeper economic relationship with the European Union and supporting British companies’ efforts to be competitive in the development of artificial intelligence.
Energy Secretary Ed Miliband is the bookmakers’ favourite to succeed Reeves, who is Britain’s first female chancellor of the exchequer. Pat McFadden, secretary of state for work and pensions, and Wes Streeting, a former health secretary, are also in the running.
($1 = 0.7471 pounds)
(Reporting by Andy Bruce and David Milliken）
