January 15, 2025
2 mins read

Reeves vows action on growth amid rising debt costs 

 

She told the House of Commons the “economic headwinds” being faced by the UK meant the government had to go “further and faster in our plan to kickstart economic growth”  

Chancellor Rachel Reeves has hit back at criticism of her handling of the economy after a turbulent few days for the pound and UK government borrowing costs. By Tuesday, the pound stood at $1.215, slightly above the 14-month low of $1.21 that it hit on Monday. 

Meanwhile, UK government borrowing costs were steady, but remained close to their highest levels since 2008. 

Shadow chancellor Mel Stride said the situation was a “Shakespearean tragedy”, but Reeves said it was “not reasonable to suggest” she was at fault for the market nervousness as borrowing costs were rising in other countries too. 

She told the House of Commons the “economic headwinds” being faced by the UK meant the government had to go “further and faster in our plan to kickstart economic growth”. 

However, Stride said Reeves should consider her job as chancellor after what he said was “stagnation” in the economy following her Budget. “To go or not to go: that is now a question,” he said. 

Many countries have seen their borrowing costs rise recently, but some have argued that decisions made in last year’s Budget appear to have made the UK more vulnerable. 

Governments generally borrow money by selling bonds to big investors, such as pension funds. UK government bonds are known as gilts. 

The yield on the 10-year gilt – the interest rate at which the government pays back a decade-long loan to investors – dropped marginally to 4.88% on Tuesday, having risen to nearly 4.9% on Monday, its highest level for 17 years. 

Meanwhile, by Tuesday afternoon the 30-year gilt yield stood at 5.44%, below Monday’s peak of 5.46%. 

Government debt costs in Germany, France, Spain and Italy have also been rising. Experts say investors are predicting US president-elect Donald Trump’s tariffs will increase US inflation, meaning interest rates will remain high there and elsewhere. 

“There has been global movements in international markets in the last week or so, and those have been global in nature, but in the UK we must do what we can,” Reeves told the Commons. 

However, some economists have told the BBC that the government is at least partly to blame for the current sell off. 

Economists and retailers have said measures introduced in the Budget, such as the increase in employers’ National Insurance contributions, will spur inflation. 

ALSO READ: Princess Kate visits hospital where she had cancer treatment

ALSO READ: Surprise fall in inflation to 2.5% eases pressure on Reeves

Previous Story

Dairy Farm Fined for Slurry Pollution in Preston 

Next Story

Iraq, UK agree on trade package worth up to $15 bn, defence deal 

Latest from ECONOMY

BP reports sharp drop in fourth-quarter profit

The financial report for British Petroleum was released on Monday, revealing a net income drop to $8.9bn, down from $13.8bn the previous year, reports Zahra Jawad British Petroleum reported a net loss

A mountain out of a molehill    

From what I saw the issues had escalated to a point where it went way past the actual problem, and became an issue of a clash of personalities….writes Suresh Vagjiani Today we

India, UK boost ties for clean energy future

Discussions also explored new opportunities in energy storage, green data centres, and offshore wind, particularly benefiting small and medium enterprises (SMEs). India and the UK on Monday reaffirmed their commitment to a

Council tax to rise as Havering faces £70m shortfall 

Havering Council’s Cabinet has passed the Council’s budget proposals for next year (2025/26).   Havering Council’s Cabinet has approved its budget proposals for the 2025/26 financial year amid ongoing financial challenges. The council

Greenwich eyes riverside revival 

Greenwich backs calls for investment to unlock its riverfront’s potential as Deputy Mayor Howard Dawber joins local leaders on a tour of the borough’s scenic Thames-side.  Greenwich has welcomed calls for greater
Go toTop

Don't Miss

UK PM urges Labour MPs to back winter fuel allowance cut plan

Starmer stressed that restricting access to the payments was a

King hosts Starmer for the first time as PM

King Charles III hosted Starmer and his wife Lady Victoria