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5d ago

Starmer Pledges Support for Reeves as Chancellor Tackles £5bn Funding Shortfall

Markets have recovered from sell-offs triggered by her Commons tears, with the chancellor returning to work under pressure to plug a £5 billion welfare funding gap without raising major taxes.

Sir Keir Starmer at prime minister’s questions with a tearful Rachel Reeves after the government’s climbdown on the welfare bill
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Overview

  • Keir Starmer and Downing Street publicly reaffirmed full confidence in Chancellor Rachel Reeves after she was seen in tears during Wednesday’s Prime Minister’s Questions.
  • UK government bonds and the pound steadied today following a sharp sell-off over concerns about Reeves’s future in No 11.
  • Reeves made her first public appearances since PMQs at Downing Street and in Parliament, insisting she is “cracking on with the job” and declining to discuss her personal matter.
  • A revolt by nearly 50 Labour backbenchers forced a U-turn on welfare cuts that created a £5 billion hole in her spending plans, which she must now fill under Labour’s fiscal rules.
  • Speculation over new revenue sources, including levies on banks, remains unresolved as Reeves maintains her manifesto vow not to raise the main rates of tax.