British Treasury Surgeon Rachel Reeves and British Defense Secretary John Healy visit Wellington barracks, in central London, on March 26, 2025.
Stephen Rousseau AFP | Gety pictures
All eyes are now on the ruling Labor Party in the United Kingdom for any sign of more political fractures that could worry the economic stability of tiles, after an extraordinary scene of the country’s minister of finance in Parliament on Wednesday.
The revenues of the bonds in the United Kingdom increased and the pound was sank against the dollar and the euro When tears fell on the face of Chancellor Rachel Reeves, as Prime Minister Kerr Starmer failed to support her when he was asked about her position during a hot parliamentary discussion.
The market movements were surprising, as traders speculated that Reeves could be about to lose its job or possible resignation, taking into account Its strict “financial rules” on spending and borrowing With her.
“There is a lot of eyes on the United Kingdom,” Simon Betawi, senior economists at the Resolution Corporation, told CNBC while the drama revealed on Wednesday.
“When it comes to the following autumn budget, whatever the advisor, they will have some really difficult decisions. I think, as much as we are concerned, adhere to the current financial rules is very important, as he told CNBC’s Ritika Gupta.
Betawi said: “Adherence to these financial rules, and depending on the priorities of the government, there may be a mixture of higher taxes and low spending, at the end of the prediction period, the road may be forward.”
The government rushed to calm in the situation amid the spread of the market, as a spokesman for Reeves is attributed to a “personal issue” without commenting. Then the Prime Minister told the BBC that He and the counselor “in Lockstep” were fully supported.
The comments seem to weaken the markets with London FTSE 100 Nearly 0.5 % increased in early deals on Thursday morning, with the British pound also above the euro and the dollar. The return on normative bonds in the UK decreased for 10 years, known as Gilts, 6 basis points.
“Say the strait”
Reeves has been under constant pressure since the last autumn budget, during which she revealed a huge batch of public spending, which will be largely funded by a significant tax increase on British companies and employers.
She also said that she would implement two male bases to obtain the debt pile in the United Kingdom and borrow under control: First, this daily government spending will be funded through tax revenues and not through borrowing, and secondly, that public debt will fall as a share of economic production by 2029-30.
British Prime Minister Kiir Starmer (L) and Treasury Adviser Rachel Reeves (PBUH) drink tea during a visit to local companies on September 26, 2021.
Justin Talis AFP | Gety pictures
The bases gave the Suewright “head hall”, however, the small space that has been eroded by more than one discounts in spending on the luxury in the blasphemy in recent months.
After another government this week, this time on the advantages of disability, Reeves must now find savings elsewhere- Difficult, when I just announced huge public spending plans – Breaking borrowing rules or inconsistent with the pledges of the Labor Party campaign and the height taxes on workers later this year.
At a broader level, in the other hand of climbing on luxury, the Labor Party leadership will now have to quarrel with a rebel group of legislators in Backbench who will feel gathering to challenge the government on other reforms that could be controversial and spending discounts.
“The nature of what has happened over the past 48 hours, with the government’s bullish bill, means that the political and economic strategy of the government is in terrible straits at the present time,” Max Wilson, Director of Public Affairs at Whitehouse Communications, told CNBC on Thursday.
Wilson said that the government finds itself with a “small waving room such as this base” because of its previous political decisions and its concessions of the back participants.
“From the economic point of view, there is a very little that they can do, and Rachel Reeves has a difficult job on her hands now, as she finds additional money without resorting to other procedures that disturb the markets, including the borrowing of more or tax, so, I really think the government has left an absolute link here,” note. “
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