(Bloomberg) — Chancellor of the Exchequer Rachel Reeves said the UK will meet its fiscal rules “at all times,” as she faced ongoing pressure to explain how she’ll stabilize Britain’s public finances following a recent spike in borrowing costs.
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“We remain committed to those fiscal rules,” Reeves said in the House of Commons on Tuesday, referring to her self-imposed target that day-to-day government spending be covered by tax receipts. “We will meet them at all times.”
A punishing selloff of British stocks, bonds and the pound in recent days has pushed gilt yields to their highest levels since the financial crisis in 2008 and sent the pound to its lowest in 14 months. On Tuesday, the UK paid the most in decades to sell 30-year inflation-linked debt, the latest sign of market pain.
That’s left Reeves facing questions over how she’ll repair Britain’s fiscal position, given that a higher debt interest bill means she’s likely to be in breach of her main fiscal rule. The Treasury is considering reducing public spending to address the situation, according to people familiar with the matter, though Reeves has yet to say so publicly.
The chancellor acknowledged that Britain has been buffeted by “economic headwinds,” and that the government must go further and faster in kick-starting economic growth.
Mel Stride, the Conservative shadow chancellor, attacked Reeves in the Commons for her decision to travel to China over the weekend, saying she should have remained in Britain instead to address the situation.
“The chancellor ducked the difficult questions by jetting off to Beijing,” he said. “While the government was losing control of the economy, where was the chancellor?”
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