Sir Keir Starmer has said the Treasury will be “ruthless” in cutting public spending as market turmoil continues.
Responding to a question about the economic situation from Sky News’ political editor Beth Rigbyhe said: “The number one mission of this government is economic growth.
“And that was provided for in the budget, but we are doing much more on economic growth, pulling those levers of change.”
Both the long term at 30 years and the benchmark at 10 years public borrowing costs were up Monday morningwith the 30-year effective interest rate (the yield on gilts) reaching a new high of 5.47% – a rate not seen since mid-1998.
The cost of 10-year borrowing rose to 4.86%, below the 2008 high recorded last Thursday, but at the same levels last seen during the global financial crash.
Political news: Chancellor urged to hold emergency banking summit
This drives up costs for the government, with the chancellor put in a position where she may have to break her self-imposed fiscal rules by failing to reduce debt and balance the budget.
The pound sterling, which may reflect investor confidence in the UK and overall economic health, had also fallen to a low not seen since October 2023, at £1 to $1.21.
Money Blog: Traders Bet on Sterling Falling 8%
The gloomy economic outlook has led to warnings that mortgage rates could rise in the coming weeks as lenders respond to the turmoil.
In what could be seen as further misery for the British people, the Prime Minister refused to rule out a cut in government spending, saying the Treasury was right to be “ruthless” in its spending cuts.
A spending review, due later this year, is expected to force government departments to make efficiency savings equivalent to 5% of their budgets.
Sir Keir told a press conference: “We will be ruthless, as we have been in the decisions we have taken so far.
“We have clear budgetary rules, and we will respect them.”
He said the government had “inherited a real mess” economically from the Conservative government.
But he said the government “is going to stick to the budgetary rules”.
“It’s a very important thing,” he said.
“We are determined to achieve this economic stability. And that’s why fiscal rules are absolutely essential to what we do.
Learn more:
Rachel Reeves faces pressure but people should give her more time, says Wes Streeting
Former PM says Reeves was ‘shaken’ by market turmoil
Please use Chrome browser for a more accessible video player
Sir Keir also twice avoided answering whether Rachel Reeves would still be chancellor by the next election in 2029, due to the bleak economic outlook.
“Rachel Reeves is doing a fantastic job,” he said, without specifying whether she would stay on.
“She has all my confidence, she has all the confidence of the entire party.
“She made some tough decisions.”
Please use Chrome browser for a more accessible video player
The Conservatives pounced on Sir Keir by failing to confirm whether Ms Reeves would still be in office at the end of this parliament.
Leader Kemi Badenoch said: “The Prime Minister has simply refused to support his Chancellor remaining in office.
“Keir Starmer and Rachel Reeves have brought the British economy to the ground. Markets are in turmoil and business confidence has collapsed, but the chancellor is nowhere to be found.
“Labour promised stability, but instead the City Minister is mired in corruption investigations and the Chancellor is hanging on by her fingernails. »