Starmer Says Reeves Will Stay as UK Chancellor Despite Setbacks

UK Prime Minister Keir Starmer said Rachel Reeves will stay on as Chancellor of the Exchequer, as he sought to draw a line under speculation about her future that sparked a bond selloff.

Reeves would stay as chancellor “for many years to come,” Starmer told the BBC on Wednesday evening, hours after failing to guarantee her position when asked in parliament. “She and I work together, we think together,” he said, adding, “We’re in lockstep.”

The prime minister’s words appeared to be an attempt to calm markets that tumbled earlier Wednesday after a tearful appearance by Reeves in the House of Commons fueled rumors that she was about to leave her position. 

The premier, who guided the Labour Party to a resounding electoral win a year ago, said he saw his project to “change the country” as something he would be working on with Reeves “together” for “a very long time to come.” He added, “That’s the strong relationship we have between each other.”

The yield on 30-year gilts earlier rose more than 20 basis points past 5.4% on the uncertainty, while the pound was the worst-performing major currency in the world, slumping more than 1% to below $1.36. Stocks also fell.

The market slide came after Starmer performed an embarrassing U-turn on his flagship welfare reforms which were supposed to save £5 billion but were effectively canceled on Tuesday after a rebellion by Labour lawmakers.

Despite Reeves’ failure to get her spending plans past her own party, many bond traders see her as their preferred chancellor because of her commitment to the so-called fiscal rules restricting UK government borrowing. They see a downside risk that a replacement could adopt a looser approach to the public finances.

Starmer said of Reeves crying in the House of Commons chamber earlier, “It was a personal matter for the chancellor, and I’ve been absolutely clear with you, nothing to do with politics, nothing to do with any discussion between me and Rachel. Nothing to do with matters of this week.”

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