Rachel Reeves Faces Mounting Pressure Pound falls and Rising Borrowing Costs

[Social Media]

 

Rachel Reeves is urgently attempting to calm financial markets as the pound tumbles to its lowest level against the US dollar in over a year, and government borrowing costs continue to soar. Sterling’s decline, coupled with a surge in yields on UK government bonds, has intensified fears that the Chancellor may be forced to hike taxes or slash spending to meet her fiscal commitments.  

 

The Treasury maintains that Reeves views her fiscal rules, which include balancing day-to-day spending by 2029, as “non-negotiable.” However, economists warn that with the UK economy grappling with stagnant growth and stubborn inflation, balancing the books without significant fiscal adjustments will be a formidable challenge.  

 

This morning, the pound dropped nearly 1% to just below $1.23—its weakest position since November 2023. Yields on 10-year gilts rose by eight basis points to 4.89%, the highest level since 2008, while 30-year gilt yields climbed to 5.39%, their peak since 1998. These moves reflect escalating concerns over government borrowing and the looming specter of stagflation, a grim combination of rising inflation and economic stagnation.  

 

Speaker Lindsay Hoyle has accepted an urgent question in the Commons, enabling MPs to question ministers on the unfolding crisis. While bond yields have been rising globally due to economic uncertainty and geopolitical risks, the UK has been hit particularly hard following an October Budget that significantly increased borrowing for infrastructure investments and imposed heavy taxes on businesses to fund spending.  

 

The Treasury’s financial headroom has been eroded, with the rise in borrowing costs leaving Labour in a precarious position. Kathleen Brooks, research director at XTB, highlighted the severity of the situation, stating, “The UK's fiscal position continues to look perilous.” She added that while the pace of the bond sell-off has eased slightly, the market remains deeply concerned.  

 

“The Chancellor is expected to make a speech in the coming days, where she may focus on public sector spending cuts rather than further tax increases to meet her fiscal rules,” Brooks noted. However, she expressed skepticism about whether Reeves could successfully reassure investors, remarking, “The rhetoric from the Labour government is one reason we are in this mess in the first place, and there are no guarantees that Reeves will be able to calm the market.”  

 

The crisis comes at a time when Reeves has only £9.9 billion of fiscal headroom left after the autumn Budget, despite introducing a £40 billion package of tax increases to boost spending. Rising debt interest costs, potentially amounting to an additional £10 billion annually, threaten to derail her plans, with Treasury sources acknowledging that she may need to act as early as March if borrowing costs remain elevated.

 

Shadow business secretary Andrew Griffith sharply criticized the government’s handling of the economy, stating, “Tragically, the gilt markets can see that the Government's growth plan is dead on arrival. It takes a certain level of incompetence to fiddle your fiscal rules and then still risk missing them.”  

 

As financial pressures mount, Reeves faces a critical test in managing the UK’s precarious fiscal position and restoring market confidence. Whether through spending cuts, tax adjustments, or other measures, her response in the coming months will be closely scrutinized by both economists and investors.  

 

Based on a report by Daily Mail 2024-01-10

 

 

[Nick Carter icp]

They will just blame the Conservatives and the Daily Mail , whilst ignoring the issue 

[scubascuba3]

Reeves far worse than Liz Trust, borrowing up, exchange rate down

[JonnyF]

5 hours ago, Social Media said:

Rachel Reeves is urgently attempting to calm financial markets as the pound tumbles to its lowest level against the US dollar in over a year, and government borrowing costs continue to soar. Sterling’s decline, coupled with a surge in yields on UK government bonds, has intensified fears that the Chancellor may be forced to hike taxes or slash spending to meet her fiscal commitments.  

 

A direct result of her "budget for growth" which in reality was exactly the opposite. More like a "budget for recession". 

 

Rachel from accounts hasn't got a clue. I wouldn't let her do my weekly shop. If I did, I'd certainly have to check my change given her dishonesty on her CV.

 

Britain is heading for recession, and they'll blame it on the Tories like they always do. 

[mokwit]

'Foreign investors are so spooked by what Starmer has done to the economics of the UK they wouldn’t loan us money today until we paid them interest of 5.21% , higher than in the Truss days and the highest for 27 years.'

 

Labour are now borrowing GBP 297 at these rates to fund their spending which they are planning to do at an assumed growth rate of 2% PA when the likelihood is less than that or even contraction due to their policies.

 

So, they will have borrowed but the tax funding to pay the interest and principle won't be there. This is Labour every time because they don't get it that economic growth doesn't 'just come' like their public sector and Union salaries did. Their policies halt growth because nobody risks their money to hand over the profits as tax.

 

They did it in the '70's and we went bankrupt even with N Sea oil and had to go cap in hand to the IMF like a 3rd world country.

 

Their incompetence and unworldliness is staggering.

 

Cue the GBP22bn Holeohoax™, 14 years of Tory rule, and as noted by another, the Daily Mail given as the cause.

 

 

 

 

[jippytum]

Labour's fiscal policy combined with that nutter Millibands 'green zero policies. The Pound falling like a stone together with Starmer looking like a deer in the headlights. 

Oh dear this after six months of Labour where will it all end???? 

 

[soalbundy]

3 hours ago, JonnyF said:

 

A direct result of her "budget for growth" which in reality was exactly the opposite. More like a "budget for recession". 

 

Rachel from accounts hasn't got a clue. I wouldn't let her do my weekly shop. If I did, I'd certainly have to check my change given her dishonesty on her CV.

 

Britain is heading for recession, and they'll blame it on the Tories like they always do. 

All major economies are heading for recession, including the USA, this what is so alarming this time around. In earlier recessions the world wasn't so in tandem, there were always some countries that were still doing well and could stabilize those economies that weren't. I've watched economic commentators on YouTube talking about the US, China, Russia, Australia, Germany, the UK etc. it's the same story, they are all headed for the plug hole and now the smaller countries in Asia are joining the mix.

[Andycoops]

The idiot imposed her own rules rather than listen to people who are actually qualified and aren't Rachel from accounts, so she will only have herself to blame.

 

The disaster created so far has turned the UK economy from a moderately thriving 1 to a near corpse in the space of 6 months.

 

Despite the statements about growth, there isn't any.

 

The incompetence is just staggering, having waited so long they can't have f***** up in a more spectacular fashion.

 

[James105]

It's taken just 6 months from when they inherited a growing economy to this.   Absolute incompetence from the economically illiterate morons.  Truss was hounded out of office for less with a plan that actually would have provided growth.  When can we expect the leftists to start calling for resignations from the PM and Rachel from accounts for getting the country's economy into such a mess so quickly?  

 

What an absolute clown show.  They really should be thinking about dissolving this government and the Labour party so it never darkens the doorsteps of the UK ever again.   Every single time they make the country poorer, weaker and less secure.   

[superal]

16 minutes ago, James105 said:

It's taken just 6 months from when they inherited a growing economy to this.   Absolute incompetence from the economically illiterate morons.  Truss was hounded out of office for less with a plan that actually would have provided growth.  When can we expect the leftists to start calling for resignations from the PM and Rachel from accounts for getting the country's economy into such a mess so quickly?  

 

What an absolute clown show.  They really should be thinking about dissolving this government and the Labour party so it never darkens the doorsteps of the UK ever again.   Every single time they make the country poorer, weaker and less secure.   

The scary thing is when considering this governments incompetence , the damage to the economy , cutting the w/f/p which is resulting in elderly deaths ( manslaughter ? ) , increasing employers N.I. C. which has resulted in fewer jobs , messing with our farmers etc etc , all this within 6 months of taking the reigns , imagine another 4.5 years . How much damage can they cause if allowed to see out their tenure ? They have to be replaced quickly but how can it be done ?

[Purdey]

I can't wait to see how they solve the problems. Does anyone know what she should do? It's like panto. 

Look behind you! 

[blazes]

6 hours ago, JonnyF said:

 

A direct result of her "budget for growth" which in reality was exactly the opposite. More like a "budget for recession". 

 

Rachel from accounts hasn't got a clue. I wouldn't let her do my weekly shop. If I did, I'd certainly have to check my change given her dishonesty on her CV.

 

Britain is heading for recession, and they'll blame it on the Tories like they always do. 

Fair enough....who else  is there to blame?

 

[JonnyF]

If anyone was wondering why the Tories lasted so long despite such poor governance, now you know.

 

 

Recession imminent. 

 

[Will B Good]

4 minutes ago, JonnyF said:

If anyone was wondering why the Tories lasted so long despite such poor governance, now you know.

 

 

Recession imminent. 

 

 

 

Lest we forget......https://x.com/i/status/1877334108453413020

 

[Nick Carter icp]

2 minutes ago, Will B Good said:

 

 

Lest we forget......https://x.com/i/status/1877334108453413020

 

 

   Liz Truss ?

Yes, the Conservatives realised her policies were a  mistake and removed her from office .

   Over to Labour , what are they going to do ?

[JonnyF]

10 minutes ago, blazes said:

Fair enough....who else  is there to blame?

 

 

It was Labour's budget, maybe they could take responsibility for once?

 

 

[Will B Good]

Just now, Nick Carter icp said:

 

   Liz Truss ?

Yes, the Conservatives realised her policies were a  mistake and removed her from office .

   Over to Labour , what are they going to do ?

 

 

You mean the Conservatives, under tremendous pressure from every quarter, removed her from office.

 

Many still fervently support her policies.

 

What are Labour going to do? No idea, nothing to do with me.....watch the news like everyone else.

[sammieuk1]

We are all getting sucked into Rachels black hole one way or another 🤔

[Nick Carter icp]

2 minutes ago, Will B Good said:

 

 

You mean the Conservatives, under tremendous pressure from every quarter, removed her from office.

 

 

 

   Is this a trick questions ?

Will I look stupid  for answering to ?

Errrrm , Yes, Those Conservatives .

Some people supported her 

Chomper Hignot gave her his full support 

[Will B Good]

8 minutes ago, JonnyF said:

 

It was Labour's budget, maybe they could take responsibility for once?

 

 

 

 

Like Liz Truss took responsibility....... by sacking Kwasi Kwarteng.......555

[Nick Carter icp]

22 minutes ago, Will B Good said:

 

 

Like Liz Truss took responsibility....... by sacking Kwasi Kwarteng.......555

 

   Rachel Reeves Faces Mounting Pressure Pound falls and Rising Borrowing Costs .

 

   But ,but , but what about the Connnsserrrvvatives 

[Will B Good]

1 minute ago, Nick Carter icp said:

 

   Rachel Reeves Faces Mounting Pressure Pound falls and Rising Borrowing Costs .

 

   But ,but , but what about the Connnsserrrvvatives 

? What about them ?

[Nick Carter icp]

2 minutes ago, Will B Good said:

? What about them ?

 

   Labour are in power now , you need to judge their performance .

You can no longer just keep criticizing the Tories , that 14 year habit needs to change .

   You are the big boys now, you need to step up to the plate and take responsibility and lead , rather than just being critical of the Conservatives all the time .

   You can no longer just sit at the back shouting about how terrible the Tories are and how much better Labour would be  .

[Will B Good]

3 minutes ago, Nick Carter icp said:

 

   Labour are in power now , you need to judge their performance .

You can no longer just keep criticizing the Tories , that 14 year habit needs to change .

   You are the big boys now, you need to step up to the plate and take responsibility and lead , rather than just being critical of the Conservatives all the time .

   You can no longer just sit at the back shouting about how terrible the Tories are and how much better Labour would be  .

 

 

Not sure why you think I should be a cheerleader for the Labour Party?......But I'm happy to give it a go..

[Nick Carter icp]

Just now, Will B Good said:

 

 

Not sure why you think I should be a cheerleader for the Labour Party?......But I'm happy to give it a go..

 

   Who would you vote for ?

 

[Will B Good]

Just now, Nick Carter icp said:

 

   Who would you vote for ?

 

 

Rupert Lowe.......only to annoy Farage.

 

If the Tories (or Johnson rather) hadn't binned the intelligentsia of the Tory party and Labour were in the doldrums....who knows? 

[sambum]

1 hour ago, Nick Carter icp said:

 

   Liz Truss ?

Yes, the Conservatives realised her policies were a  mistake and removed her from office .

   Over to Labour , what are they going to do ?

 

Say that it's a disgrace that people should have to live this way?

[Jimjim1]

4 hours ago, jippytum said:

Oh dear this after six months of Labour where will it all end???? 

Once again in Bankruptcy just like the 70’s all over again.

 

When will the British public learn that voting for Labour means high taxation and hardship for every household in the country, this time it took them barely a week to begin frightening investors and now six months later those same investors are so scared they will not invest at all and companies both large and small are shedding jobs like rain, because of excessive taxation with at least one  closing down a business that has been running for a hundred plus years.

They have even instigated a legal land grab by making farmers pay inheritance tax on farm land knowing full well that the average small holding is valued much more than a million £ thereby placing it into an inheritance tax situation that the majority cannot afford to pay so the government snatches it all for free, echo’s of Stalin abound.

 

But of course the nay sayers and those who believe entirely in Labour rhetoric will not accept the above, perhaps that’s why they decide to move to another country, you know who you are and I hope that when your pension gets thrashed by taxation under Labour you remember who did it

[kwak250]

I was waiting for 44baht/gbp before i send a lump of cash over but looks like i better send now 

[bangadang]

UK is down the toilet and thank God I moved here. The world is, frankly, on the slide just about everywhere.