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Rachel Reeves’ spring forecast had long been billed as a paean to “stability”, a veiled warning to Labour MPs not to launch a coup against Prime Minister Sir Keir Starmer and derail what she claims is “the right plan” for the economy.
By the time the chancellor arrived at the despatch box at 12.30pm on Tuesday, it was clear the more immediate threat to the British economy came not from the MPs behind her but from the bombs falling more than 3,000 miles away in the Middle East.
But Reeves did not change her message. For her, “stability” is an objective to be relentlessly pursued in “a world which has become yet more uncertain”.
Reeves, once dubbed “boring, snoring” by a BBC executive, now almost wears the jibe as a badge of honour, concluding that households, businesses and the City of London have had enough political excitement in recent years. Her speech was deliberately short and shorn of any new policy.
Reeves arrived at the House of Commons with City screens flashing red, borrowing costs spiking, UK stocks dropping sharply and energy prices surging in the wake of escalating tensions in the Middle East.
Delivering a lecture on the benefits of stability from a burning platform was not an easy task, and all of Reeves’ talk of falling inflation and lower interest rates was scripted before US and Israeli missiles struck Tehran.
Reeves brandished forecasts by the Office for Budget Responsibility, which made it clear that her economic strategy — and her plan for political survival — could be derailed by the “significant risks” attached to the widening conflict in the Middle East.
If the war drags on and inflation and energy prices edge up — and interest rates do not come down — Reeves’ hopes of raising the spirits of jaded or angry voters will quickly evaporate, as may Starmer’s hopes of political revival.
In the face of these challenges, the chancellor argued that events in the Middle East made it even more vital that she stick to her policy of fiscal discipline, which she insists provides the basis for recovery.
Reeves did not explicitly set out any policies to tackle the fallout from the war — repeatedly refusing to commit to reversing a planned increase in fuel duty from September — but the implication was that the money was there if needed.
There was also a clear message to Labour MPs: if they thought an economic move to the left — or toppling Starmer — was a good idea before the war started, it would be decidedly dangerous now.
“We must reject the political instability that would put at risk all the progress we have made,” Reeves said, in a reference to a possible coup against Starmer if elections on May 7 to the Scottish and Welsh parliaments and English councils go badly.
And in a warning to the left of the governing party, she added: “We must reject the temptation of easy answers and reckless borrowing to protect family finances and bring the cost of living down.” One ally of Reeves jokingly used italics to stress: “This is the right plan.”
Reeves used her speech to present Labour as the only party of economic credibility and social justice. But her opponents saw it as an exercise in complacency, ignoring threats including rising unemployment and a downgrade in the growth forecast for 2026 by the Office for Budget Responsibility.
Conservative shadow chancellor Sir Mel Stride said the absence of new announcements was part of a “cunning plan to avoid U-turns further down the line”. A massive hole in the defence budget remains unfilled.
Daisy Cooper, Liberal Democrat Treasury spokesperson, said the UK was “paying the price for two anti-growth Labour Budgets [in 2024 and 2025] and the chancellor today has wasted a chance to turn things around”.
Robert Jenrick, Reform UK Treasury spokesperson, accused Reeves of acting like a “rogue landlord who keeps squeezing the tenant with higher and higher rents, all the while the property is going to rack and ruin”.
Reeves — who has described boosting growth as her number one priority — said she would address Britain’s sluggish economy in a speech later this month. She said closer relations with the EU and a greater use of AI will be at the heart of a new strategy.
She is not the first chancellor to have a big economic event overshadowed by external events, leaving some of what the finance minister says looking somewhat obsolete in a matter of days or weeks.
Reeves’ Spring Statement last year took place a week before US President Donald Trump upended the world trading system with his “liberation day” tariffs.
In March 2020, Rishi Sunak delivered his Budget just 12 days before Britain entered its first Covid-19 lockdown. In the fiscal event, Sunak earmarked £12bn to tackle the pandemic; the final bill has been estimated at between £300bn and £400bn.
Against Tuesday’s uncertain backdrop, and with Starmer facing calls to be “braver” and less gloomy after Labour lost the Gorton and Denton by-election last week, Reeves is clinging to her “stability” mantra.
Privately Treasury officials have another strategy. “We’re keeping our fingers crossed,” said one.