Finance
UK's Starmer forced to defend finance minister, fiscal rules
Published by Global Banking and Finance Review
Posted on January 24, 2025
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Published by Global Banking and Finance Review
Posted on January 24, 2025
LONDON (Reuters) - Prime Minister Keir Starmer was forced on Monday to defend his finance minister, Rachel Reeves, saying she would make sure day-to-day spending was covered by taxes while securing the growth needed to support the government's reform plans.
At a speech when Starmer hoped to talk about what he called measures to make Britain an artificial intelligence (AI) 'superpower', he was repeatedly asked whether he had confidence in Reeves after borrowing costs rose for a sixth straight day.
Starmer was quick to support Reeves, who was also criticised by political opponents for travelling to China over the weekend after a week of market volatility which has seen the pound fall against the dollar. He said it would take time to turn around what he called "14 years of failure" by his Conservative political opponents.
But he repeatedly avoided answering whether there would be any future spending cuts, something that becomes increasingly likely as Reeves' room for manoeuvre is limited by higher borrowing costs but is politically unpalatable for a government which has said there would be no return to economic austerity.
"Rachel Reeves is doing a fantastic job," he told reporters. "She has my full confidence. She has the full confidence of the entire party. She was given incredibly challenging tasks."
He again said the government would stick to its fiscal rules and asked if the finance ministry was right to be "ruthless in pursuit of spending cuts", he said: "Yes, we will be ruthless, as we have been ruthless in the decisions that we've taken so far. We have clear fiscal rules and we will keep to those fiscal rules."
Being asked repeatedly about whether he backs his finance minister and facing repeated criticism online from U.S. billionaire and Donald Trump ally Elon Musk have done little to allow Starmer to focus on his government's reform programme.
But he hopes that his reform plans, including Monday's announcement on measures to try to make Britain the world leader in AI, will spur the kind of economic growth needed to win over voters before the next election in 2029.
(Reporting by Elizabeth Piper and Sarah Young, editing by Kate Holton)