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Rachel Reeves breaks cover for Commons grilling after ‘fleeing’ to China

Rachel Reeves was mocked for performing a “Peking duck” as MPs accused her of fleeing to China to avoid Britain’s market meltdown.

The under pressure Chancellor was met with fury as she faced scrutiny for the first time since returning from Beijing to woo its Communist leaders.

In a merciless Commons grilling, Shadow Chancellor Mel Stride accused her of “scampering halfway around the world with a begging bowl” while markets spiralled.

The market turmoil saw UK borrowing costs hitting a 27-year high and the pound slumping to its lowest level since 2023.

Critics insist Ms Reeves’ huge Budget tax raid is to blame, with businesses warning it has crushed growth by fueling inflation and triggering a jobs cull.

Mel Stride

Mel Stride (Image: PA)

Although debt costs have been rising around the world, Britain has been harder hit than many other countries.

And economists say the Chancellor will almost certainly have to slash spending or push taxes even higher this year as a result.

Mr Stride compared her handling of the economy to a Shakespearean tragedy, adding: “To go or not to go? That is now a question.”

He also joked the decision of Ms Reeves not to answer an urgent Commons question on the economy ahead of her weekend China trip had been branded the “Peking duck” in Labour circles.

On Monday Downing Street took the unusual step of insisting Ms Reeves will remain as Chancellor for the “whole of this Parliament” amid speculation that she could be turfed out of No 11 with Labour stalwart Pat McFadden replacing her.

Updating MPs on her China trip Ms Reeves argued the “economic headwinds” facing the UK showed the Government must go “further and faster in our plan to kickstart economic growth”.

But Mr Stride hit back, telling the Commons: “We have seen it all before. Socialist governments that think they can tax and spend their way to prosperity, Labour governments that simply do not understand that if you tax the living daylights out of business, you will get stagnation.

“They do not understand, because there is barely a shred of business experience on the frontbench opposite.”

Labour Leader Delivers His First Speech To Party Conference As Prime Minister

Keir Starmer (Image: Getty Images)

He added: “This whole sorry tale is nothing short of a Shakespearean tragedy, playing out before our eyes. This is the Hamlet of our time. They promised the electorate much, while pouring the poison into their ear.

“At the end, you can feel the end, the Chancellor flailing, estranged, it seems, from those closest to her, those about her falling, the drums beating ever closer.

“To go, or not to go, that is now a question. The Prime Minister will be damned if he does, but he will surely be damned if he does not. The British people deserve better.”

Ms Reeves went on to defend her trip to China before accusing the Conservatives of presiding over 14 years of “stagnant economic growth, higher debt and economic uncertainty”.

She added: “And we have seen global economic uncertainty play out in the last week.

“But leadership is not about ducking these challenges, it is about rising to them.

“The economic headwinds that we face are a reminder that we should, indeed we must, go further and faster in our plan to kickstart economic growth that plunged under the last government.”

The Chancellor also refused to rule out a full Budget in March.

Asked in Parliament if she could rule out tax rises and spending cuts in an emergency Budget, the Chancellor instead recommitted to the borrowing rules announced in October.

“We have committed to have just one budget per year to provide businesses with the certainty that they need to invest, so we will have an update from the OBR in March,” she said.

“We have set out the fiscal rules that we will balance day to day spending with tax receipts and we will get debt down as a share of GDP within the forecast period, and we will continue at all times to meet those fiscal rules.”

Pensioners protesting about the Labour government taking away from some pensioners Photo:Philip Cob

John McDonnell (Image: Philip Coburn)

Former shadow chancellor John McDonnell said both the Prime Minister and Ms Reeves had “tied our hands unnecessarily” in their early economic decisions and the “strictures we placed upon ourself need to be re-examined.”

Mr McDonnell, a key figure in Jeremy Corbyn’s leadership who last year had the Labour whip withdrawn for voting to scrap the two-child benefit cap, said imposing cuts to balance the books would be “politically suicidal”.

He told BBC Radio 4’s Today programme: “The electorate have to be protected, otherwise I’m afraid we’re looking at a level of disillusionment which then turns people towards, unfortunately, Reform, and I think that would be a disaster for the country.”

The former frontbencher, who is on the Labour left, suggested the Government just has to “see through” the market turmoil, but he insisted a wider review of economic strategy is necessary including intervention from the Bank of England “if necessary”.

Labour had promised during the 2024 election campaign not to increase taxes on “working people”, explicitly ruling out a rise in income tax, VAT or national insurance.

Sir Keir has stressed the Government will meet its self-imposed “fiscal rules” – including requiring day-to-day spending to be met from revenues rather than further borrowing.

But meeting the rising cost of government borrowing eats into the funding available, which could force Ms Reeves to act to either reduce expenditure or hike taxes when the Budget watchdog gives its updated forecast in March.

The Prime Minister said the Government would be “ruthless” in its approach to public spending while Downing Street said “nothing is off the table” as departments consider where to cut spending.

Security minister Dan Jarvis defended the Chancellor as he faced broadcasters on the Tuesday morning media round, saying she is doing a “good job” in difficult circumstances inherited by the previous government.

“The Chancellor has been in China over the course of the weekend, I think that was the right thing for her to do and she’s getting on with doing a difficult job of delivering economic growth for the country,” he told Sky News.

“These are difficult economic headwinds that we’re dealing with at the moment, but I think she’s doing a good job and I think the Prime Minister thinks that as well.”

Shadow financial secretary to the Treasury Gareth Davies denied the previous Tory government had left behind a “terrible situation” for the Chancellor and said she had “made it worse” with the autumn budget.

Asked whether he would accept that her economic inheritance was not good, he told Sky News: “It was a lot better than it is today.”

Mr Davies added: “She needs to urgently get a grip of this and make sure she can calm nerves. I understand she’s coming to the House today under the guise of an update on her visit to China but let’s be clear what this is about: this is about her having to come out to calm markets, calm nerves because it’s clearly very troubling out there.”

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