Keir Starmer refused to guarantee Rachel Reeves is safe in her job today as financial markets battered the UK again.
Traders have pushed the government’s borrowing costs even higher, while the Pound lost more ground against the dollar.
Experts have been cautioning that the Chancellor, who is coming back from a business trip to China, will need to revise her financial plans due to the disorder.
After giving a speech on AI in London, Sir Keir repeatedly dodged questions on whether ministers will be forced to scale back their expectations.
The Prime Minister emphasized that the administration will adhere to the financial regulations and stated that integrating artificial intelligence can result in significant savings for the government and stimulate economic expansion.
He expressed his trust in Ms. Reeves but refrained from confirming if she will remain in her position until the upcoming election, a guarantee No10 has provided concerning Foreign Secretary David Lammy.
Treasury Chief Secretary Darren Jones has written to colleagues laying out the urgent need for efficiencies.Â
The grim signs came as businesses blame Ms Reeves’ huge Budget tax raid for crushing economic growth.
CBI chief Rupert Soames said ‘confidence and trust’ had been ‘bruised’ by the Chancellor and firms will have to hike prices and cut jobs.Â
Keir Starmer have a speech this morning insisting mass deployment of AI can save the taxpayer huge sums
Analysts have been warning that Rachel Reeves – who is returning from a trade trip to China (pictured) – will be forced to rip up her spending plans thanks to the pressure on UK gilts and the Pound
The interest rate on 10-year gilts – a main way the government borrows money – was up again this morningÂ
The Pound was also down further against the US dollar this morning
Sir Keir and Science Secretary Peter Kyle (second from right) speaks with researchers at UCL today
Sterling fell by a cent to $1.21 this morning, having hit its lowest level since November 2023 last week.
The yield on 10-year gilts – a main way the government finances itself – remains at the highest levels since 2008, at one point reaching 4.89 per cent.
The interest rate on 30-year gilts also hit fresh 27-year highs, up five basis points at 5.5 per cent, although it later settled closer to 5.41 per cent.
Asked about the febrile markets and the likelihood of spending cuts, Sir Keir reporters: ‘We will be ruthless, as we have been ruthless in the decisions that we’ve taken so far.
‘We have got clear fiscal rules, and we are going to keep to those fiscal rules, and that’s why the Chancellor was absolutely right in the words that she chose to describe the approach that we will take.’
Asked if he had confidence in the Chancellor, and whether she would remain in post until the next election, Sir Keir said: ‘Rachel Reeves is doing a fantastic job. She has my full confidence. She has the full confidence of the entire party.’
Mr Soames told BBC Radio 4’s Today programme: ‘The Chancellor told us at the time of the budget that there was an unexpected hole of about £22 billion pounds in the Government finances, and business was going to have to fill it.
‘In filling in one hole, it’s created another, and that hole is a hole in the confidence and trust that business has in the Government.
‘I think sometimes it’s not understood, the extent of the impact, particularly on companies that employ lots of people.
‘We think the national insurance increases are going to feed through into inflation, we’re going to have a lower growth rate, but also, because of things like the Employment Rights Bill coming along, you’re going to find people laying people off and less likely to employ.’
He also took aim at the Employment Rights Bill, which will give workers rights to claim sick leave, parental leave and unfair dismissal from day one.
Mr Soames said of the business response: ‘I think not only will they not employ, I think they will let people go.
‘I think there could be quite an ugly rush before some of these things come into force.
‘Nobody wants this, but the things like the probation periods in the Employment Rights Bill, we don’t want that to become an adventure playground for employment rights lawyers.’
The letter from Mr Jones, sent on December 12 and seen by the Telegraph, says the spending review due to finish in June must be tough.
Mr Jones wrote: ‘Growth is the only way that we can deliver better outcomes in public services, without raising taxes on working people and is our primary mission for this Parliament.
‘Spending Review 2025 cannot be a business-as-usual spending review. Building on our missions, the Plan for Change set out ambitious milestones that must be delivered within the challenging fiscal context we inherited. Success will require ruthless prioritisation.’
Ms Reeves is pledging a new drive to tackle waste across the public sector, which will leave ‘no stone unturned’.
Officials will work with the private sector to ’embrace ideas, expertise and innovation’ in a bid to cut on unnecessary spending.
Panels made up of experts from outside Government are set to be brought into every department in order to bring perspective on how taxpayer’s money is being spent and how to best use it.
That mirrors efforts across the pond where Elon Musk and Vivek Ramaswamy were tasked in the new Trump administration to look at cutting regulations, spending, and headcounts within government as part of the Department of Government Efficiency, or ‘Doge’.
Cabinet Office minister Pat McFadden insisted this morning that Ms Reeves had been right to go to China despite the crisis at home.Â
He told BBC Breakfast: ‘I think the people saying she shouldn’t have gone are wrong and making a bad mistake.
‘It is absolutely right for the Chancellor of the Exchequer, for the chief economic voice in the United Kingdom, to go and to beat the drum for British business and for investment in the United Kingdom.
‘It was in the national interest that the Chancellor went to China, and that is why it is absolutely right that she went.’
CBI chief Rupert Soames said ‘confidence and trust’ had been ‘bruised’ by the Chancellor and firms will have to hike prices and cut jobs
Treasury Chief Secretary Darren Jones has written to colleagues laying out the urgent need for efficiencies
In his speech, Sir Keir said there would be ‘teething problems’ with the use of AI but the technology had the potential to revolutionise public services.
‘AI isn’t something locked away behind the walls of blue chip companies; it’s a force for change that will transform the lives of working people for the better,’ he said.
‘So if you’re sitting around the kitchen table tonight worrying about the opportunities at your children’s school, AI can help teachers plan a lesson tailored to your children’s specific needs.
‘If you’re worried about waiting times – aren’t we all? AI can save hundreds of thousands of hours lost to missed appointments, because it can identify those on the list most likely not to turn up and help get them the support that they need, maybe change for a more convenient appointment.
‘It can spot potholes quicker, speed up planning applications, reduce job centre form-filling, help with the fight against tax avoidance and almost halve the time that social workers spend on paperwork.’
Sir Keir added: ‘Yes, there will be teething problems. Of course there will.
‘But we can’t lose sight of the vast potential here.’
Asked about how companies and researchers may use a proposed national data library which includes anonymised health data, Sir Keir told reporters: ‘It is important that we keep control of that data, I completely accept that challenge, and we will do so.
‘But I don’t think that we should have a defensive stance here that will inhibit the sort of breakthroughs that we need.’
Pressed about the health data, he added: ‘When it comes to health data, particularly NHS data, it is really important we stay in control of this, and we will stay in control of it, because we need on the one hand – all anonymised of course – to use the potential of that data, but on the other hand, they should be protected and the way to protect it… is to keep control of it.’
