UK (Parliament Politics Magazine) – Culture Secretary Lisa Nandy backs Rachel Reeves’ China visit, arguing that the Chancellor is right to prioritise global ties despite domestic economic challenges.
Despite Conservative calls to cancel it, Ms Nandy stated that the Chancellor’s decision to continue with the trip was the right one.
She admitted that the government’s economic plans were not without flaws, and it has been reported that Ms Reeves, a prominent member of Keir Starmer’s team, is reportedly facing backlash within the Cabinet.
Culture Secretary backs Reeves’ growth plan
Liza Nandy expressed confidence that the Chancellor is heading in the right direction to revive the economy.
She stated,
“That is why it is absolutely right and proper that the Chancellor is taking seriously our relationship with the world’s second-largest economy and is in China this weekend.”
Ms Nandy added, “We are confident we are on track to be the fastest-growing economy in Europe.”
Nandy responds to ‘Denial’ claim
In response to BBC’s question about her being ‘in denial’ over the economic difficulties, Ms Nandy defended her stance, saying,
“I’m not for a moment saying it is all going swimmingly.”
When asked about public concerns over the economic issues, she told Sky News that the government is taking the situation seriously and that there is no need to worry, as the economic challenges are part of broader global trends affecting countries like the UK and the US.
Tories urge Reeves to cancel China trip over crisis
The Conservatives insisted that Ms Reeves should cancel her China visit due to rising borrowing costs and a sharp decline in the value of Sterling.
Critics have compared the current crisis to the 1976 economic challenges when Denis Healey, then Labour’s Chancellor, was forced to cancel his US trip to manage the UK’s financial troubles.
Economists warn of tax hikes or cuts for Reeves
Economists have raised concerns that Ms Reeves may have to introduce higher taxes or reduce spending to meet the UK’s fiscal rules, as the government’s debt interest bill could rise.
According to the cultural secretary, the UK’s fiscal rules are strict and require the government to maintain its everyday spending with its revenue, while also reducing public debt.
Ms Nandy assured no borrowing for day-to-day costs, pledging plans to address waiting lists, job opportunities, housing, and economic stability to protect working people.
IFS warns of tight budget for UK government
The Institute for Fiscal Studies has warned that increased interest rates may risk the government’s limited financial leeway, as growing debt servicing costs could shrink Labour’s expected fiscal space, raising concerns about the UK’s long-term economic prospects.
UK pound falls as borrowing costs rise
The pound hit its lowest level in over a year on Thursday, as UK borrowing costs surged to their highest level since the financial crisis.
With increasing costs, experts warn that tax hikes or spending reductions may be necessary for the government to meet its financial rules.
Economists explained that higher borrowing costs typically boost Sterling, but concerns about the UK’s economic stability led to its fall.
However, a new report seen by The Independent revealed that the documents indicated a 20% rise in food and household prices.
Ed Davey’s stance on Chancellor’s visit
Ed Davey, leader of the Liberal Democrats, suggested Ms Reeves postpone her visit, drop the national insurance hike, and focus on restoring trade ties with Europe. He also slammed the previous government of Conservatives for mishandling the economy.
Chancellor’s visit was planned last year
Chancellor Rachel Reeves’s trip to China was already planned early next year to resume the UK-China Economic and Financial Dialogue, the first since 2019. The visit, aimed at enhancing financial ties, follows detailed discussions with Chinese officials and will include a private sector summit with major UK institutions like HSBC and Standard Chartered.
Ms Rachel Reeves is ready to fly to China on Friday.