Rachel Reeves sent markets tumbling today after a tearful breakdown in the Commons fuelled speculation she is on her way out.
As stunned MPs looked on, the Chancellor wept in the Commons chamber just moments after admitting she was feeling the pressure following a series of humiliating U-turns.
TV cameras captured brutal footage of the self-styled ‘Iron Chancellor’ wiping away tears as Sir Keir Starmer ducked questions about whether she is safe in her job.
The pound fell sharply and the government’s borrowing costs jumped as rumours swirled that she could be headed for the exit, taking Labour‘s remaining fiscal credibility with her.
Downing Street insisted that the Chancellor is not set for the chop, despite Labour MPs blaming her for disastrous cuts to disability benefits and winter fuel payments, which have been the subject of costly and shambolic U-turns.
No 10 flatly denied claims that the PM and Chancellor had an angry showdown following the latest humiliating retreat over welfare reform on Monday night. Reports of a bust-up with Deputy prime Minister Angela Rayner were also denied.
The Treasury insisted that the Chancellor’s distress was the result of a ‘personal matter’.
But a Whitehall source said the Chancellor revealed she is feeling the heat following a disastrous period for the Labour government.
Rachel Reeves sent markets tumbling today after a tearful breakdown in the Commons (pictured) fuelled speculation she is on her way out
As stunned MPs looked on, the Chancellor wept in the Commons chamber just moments after admitting she was feeling the pressure following a series of humiliating U-turns
Commons Speaker Sir Lindsay Hoyle briefly chastised her as she entered the Commons chamber for taking too long over her answers the previous day.
A source said she tried to explain away her conduct by replying: ‘I’m just under so much pressure.’
Experts warned that a series of expensive U-turns, couple with faltering economic growth could blow a £20 billion hole in the public finances, forcing the Chancellor to break her own promise not to raise taxes this autumn. She is said to have resisted this week’s climbdown over welfare cuts until the final moment, arguing it would wreck the government’s economic credibility.
Ms Reeves appeared upset as she took her seat next to the PM on the government front bench. Sir Keir’s parliamentary aide Chris Ward tapped her on the shoulder to see if she was all right.
But she was unable to control her emotions when Kemi Badenoch accused Sir Keir of using her as a ‘human shield’ – and the PM failed to back her.
During angry exchanges in the Commons, the Tory leader pointed out that the Chancellor ‘looks absolutely miserable’, asking the PM: ‘Labour MPs are going on the record saying that the Chancellor is toast, and the reality is that she is a human shield for his incompetence. In January, he said that she would be in post until the next election. Will she really?’
Sir Keir – who had previously guaranteed Ms Reeves her job until the next election – ducked the question. Instead, he joked that Mrs Badenoch would be gone before the election and accused the Conservatives of leaving behind a toxic economic legacy.
Mrs Badenoch replied: ‘How awful for the Chancellor that he couldn’t confirm that she would stay in place.’
TV cameras captured brutal footage of the self-styled ‘Iron Chancellor’ wiping away tears as Sir Keir Starmer ducked questions about whether she is safe in her job
Reports of a bust-up with Deputy prime Minister Angela Rayner, pictured on ITV’s Lorraine, were also denied
Commons Speaker Sir Lindsay Hoyle, pictured top right, briefly chastised her as she entered the Commons chamber for taking too long over her answers the previous day
Despite her obvious distress, the PM did not appear to speak to Ms Reeves as he marched out of the chamber for two hours of crisis meetings with MPs. It was left to the Chancellor’s sister Ellie Reeves to offer comfort to her – the two sisters leaving the chamber hand in hand.
Doubts about the Chancellor’s future triggered market panic as analysts feared a new Chancellor could tear up Ms Reeves’s fiscal rules and embark on an even higher spending programme.
Downing Street later told reporters that the PM had full confidence in Ms Reeves. Asked why he had not defended her in the Commons, a spokesman said: ‘He has done so repeatedly.
‘The Chancellor is going nowhere. She has the Prime Minister’s full backing.
‘He has said it plenty of times, he doesn’t need to repeat it every time the Leader of the Opposition speculates about Labour politicians.’
Former Labour Cabinet minister Alan Johnson insisted Ms Reeves was a ‘tough cookie’ who ‘ain’t going to quit’.
But financial analyst Kathleen Brooks, of investment firm XTB, said the ‘prospect of political turmoil’ was ‘spooking the bond market’ and causing government borrowing costs to rise.
She added: ‘The PM might be keeping his options open at this stage, but the Chancellor is a strange choice to axe from a market perspective.
Experts warned that a series of expensive U-turns, including this week’s welfare bill, coupled with faltering economic growth could blow a £20 billion hole in the public finances
She was unable to control her emotions when Kemi Badenoch, pictured centre, accused Sir Keir of using her as a ‘human shield’ – and the PM failed to back her
It was left to the Chancellor’s sister Ellie Reeves to offer comfort to her – the two sisters leaving the chamber hand in hand
‘The market is pricing in the possibility of a replacement chancellor with a more left-leaning agenda, which is spooking the bond market.’
Cabinet Office minister Pat McFadden and justice secretary Shabana Mahmood are tipped as potential replacements for Ms Reeves if she resigns or is sacked in the coming weeks.
The extraordinary episode came amid growing questions about Sir Keir’s leadership following a chaotic U-turn over welfare reform has raised fresh doubts about his judgment as he approaches his first anniversary in power this weekend.
The PM was forced to abandon £5 billion of cuts to disability benefits on Monday night after Labour whips warned he was heading for defeat despite offering huge concessions to rebel backbenchers last week.
One minister described the events of the last week as a ‘total s*** show’.
But Downing Street said Sir Keir planned to continue with his approach to government despite the recent reverses. Asked if he would be making any changes to avoid repeating recent mistakes, a No 10 spokesman said he would ‘plough on’ with delivering the government’s agenda.
Rebel ringleader Rachael Maskell said there had been a ‘change in power’ away from the PM in the wake of the U-turn, and called on the Government to impose wealth taxes.
Fellow rebel Cat Eccles said Sir Keir’s explanation that he had been too distracted by foreign affairs to focus on the welfare row was ‘not a great excuse’.
Former Labour Cabinet minister Alan Johnson, pictured, insisted Ms Reeves was a ‘tough cookie’ who ‘ain’t going to quit’
Justice secretary Shabana Mahmood, pictured on Tuesday, has been tipped as a potential replacement for Ms Reeves if she resigns or is sacked in the coming weeks
Allies of Angela Rayner boasted that she had been ‘instrumental’ in persuading Sir Keir he would have to ditch the disability cuts to avert a catastrophic Commons defeat by his own MPs.
Ms Rayner insisted she was not gunning for the PM’s job, despite fears in No 10 that she is on manoeuvres.
She told ITV’s Lorraine show that ‘to be fair’ to Sir Keir ‘there’s a lot going on and the PM’s been here there and everywhere doing the job for Britain’.
Asked about her own ambitions she said there was ‘no chance’ she would ever want to be PM, joking it would ‘age me by 10 years in six months’.
