A defiant Rachel Reeves has defended her decision to fly to China for a business trip, despite mounting fears of an impending economic crisis in Britain.
The pound recently hit a new 14-month low, and government borrowing costs have risen, prompting calls for Reeves to cancel her trip and remain in the UK to address the market turmoil.
However, Reeves insisted that the visit was “in the national interest,” emphasizing the government’s efforts to boost economic growth. She stated that growing the economy was “front and centre” of her plans and would be achieved through “careful pragmatic cooperation with international partners.”
“By finding common ground on trade and investment while being candid about our differences and upholding national security, we can build a long-term economic relationship with China that works in the national interest.”
Rachel Reeves
Her trip has sparked controversy, especially after the revelation of an alleged Chinese spy close to the Duke of York. The Tories accused Reeves of being “missing in action,” while the Liberal Democrats urged her to announce an economic “plan B.”
The Institute for Fiscal Studies (IFS) warned that Reeves might face “unenviable” options due to the economy she inherited, global factors, and “a series of government choices and mutually incompatible promises.” Ben Zaranko, associate director at the IFS, suggested Reeves had limited “headroom” due to her “highly undesirable” tax and spending policies.
Former Deputy Governor of the Bank of England, Sir John Gieve, also warned of potential “severe” squeezes on public services, indicating difficult decisions ahead. “The choice she’s going to face is whether to raise borrowing, increase taxes, or institute significant reductions in public services,” he said.
Reeves, the most powerful member of Sir Keir Starmer’s team, has faced criticism from within her own cabinet. One senior government figure expressed concern, saying, “God almighty, if we don’t get some economic growth soon, we are in big trouble.”
A senior minister questioned Reeves’ handling of the Budget, particularly her inheritance tax changes, which have caused discontent among farmers but will raise only around £500m.
The Treasury emphasized that improving the UK’s economic standing would be “at the forefront” of Reeves’ mind while abroad, with No 10 defending the trip as essential, given China’s forecasted role as a major driver of growth this decade.
Calls for Immediate Action
Shadow Chancellor Mel Stride criticized Reeves, calling for her to “urgently” return from China. “The pound is falling, borrowing costs have hit their highest in almost 30 years, and the economy is increasingly vulnerable – yet the Chancellor isn’t even in the country,” he said.
He added, “We are witnessing an economic mess of Rachel Reeves’s own making, with the impacts of her disastrous Budget continuing to bite. Yet astonishingly, she chose to get on a jet rather than stay and try to get a grip.”
The Tories had earlier urged Reeves to abandon the China trip to address soaring borrowing costs and a dramatic fall in Sterling. Comparisons have been drawn to the 1976 economic crisis, when Labour Chancellor Denis Healey was forced to cancel a trip to the US to manage the UK’s economic challenges.
Despite these concerns, Culture Secretary Lisa Nandy assured the public that they “shouldn’t be worried” about the economy, attributing the situation to “global trends” affecting many countries. She acknowledged that the government’s plans were not “all going swimmingly” but expressed confidence in Reeves’ ability to “get the economy growing again.”
During her visit, Reeves will meet China’s Vice-Premier He Lifeng in Beijing to discuss trade and investment, as well as address “difficult issues” such as China’s support for Russia’s war in Ukraine. Bank of England Governor Andrew Bailey, FCA CEO Nikhil Rathi, and senior representatives from major British financial services firms will accompany her.
In Beijing, Reeves will also visit British bike brand Brompton’s flagship store before heading to Shanghai for further discussions with representatives from British and Chinese businesses. The government described this engagement as a “reset” of relations with China, emphasizing that the two nations “will not, and do not, always agree.”
READ ALSO: EC’s Forensic Audit Crucial for Credibility of Ghana’s Future Elections – Omane Boamah
