Chancellor Rachel Reeves has pledged to go “further and faster” to improve economic growth after market turmoil saw the cost of servicing Britain’s debt rise.
The past few days have seen increased pressure on public finances, with government borrowing costs reaching multi-year highs.
Conservative shadow chancellor Mel Stride called it a “crisis brewing in Downing Street”, saying the business tax hike in October’s budget had damaged Britain’s economic prospects.
Reeves said he was “under no illusions” about the scale of the challenge on the economy.
It is understood she will now bring forward announcements from Labour’s promised industrial strategy within the next two weeks.
The Chancellor was addressing the Commons after her return to the UK. Drive investment from visiting China.
During the debate, he accused conservative critics of ignoring the “global volatility” behind rising borrowing costs in other countries such as the US, Germany and France.
“The economic difficulties we are facing are a reminder that we must, in fact, go further and faster in our plan to jump-start our economic growth that faltered under the previous government,” he told MPs. “
Reeves promised to set new economic policies after next week’s meeting of the World Economic Forum in Davos.
The BBC has been told the industrial strategy, As promised in the Labor manifesto, Now being “fast tracked” to help accelerate progress.
Sector announcements, Like this week’s strategy for boosting artificial intelligencewill be introduced in the coming weeks.
With Reeves navigating a critical moment as chancellor, investors have demanded higher yields on UK government bonds – known as gilts.
The yield – the interest rate at which the government pays back investors – is an important indicator of market confidence in gilts.
The yield on 30-year gilts was 5.42 percent on Tuesday. Close to the highest since 1998. Meanwhile the yield on 10-year debt was 4.87% – the highest since 2008.
If sustained, the UK’s higher borrowing costs could add £10bn to annual debt interest by 2029-30. Ending the Chancellor’s £10bn headroom against his self-imposed fiscal principles.
Speaking in the Commons, Stride accused the government of “talking about the economy” and “crippling business” with budget increases in employers’ National Insurance (NI) contributions.
“Growth has been stoned to death, inflation is soaring, affecting millions, interest rates are at an all-time low, and business confidence has sunk to the ground,” he added.
“This is a crisis made in Downing Street.”
Conservative MP Luke Evans added to the criticism, claiming that higher bond yields showed “markets don’t believe in his growth plan”.
But in response, Reeves called on Evans to “get real”, arguing that there was “global volatility in the markets”.
She said: “I do not believe it is reasonable to suggest that the rise in bond yields in the US, Germany and France is due to the decisions of this government.”
The chancellor spent the weekend looking for new investment in China, sparking claims she was capitulating to Beijing and dodging awkward questions in parliament.
During the debate, Rios argued. Agreements concluded during his visit to China It would be worth £600m to the UK over the next five years.
But Stride argued that the current high level of interest on the debt would cost “100 times what she says she brought back from Beijing”.
Liberal Democrat Treasury spokeswoman Daisy Cooper argued that the benefits from China’s new deal were equivalent to “just five hours spent on the NHS”.
Cooper argued that Reeves’ budget “didn’t work”, and claimed the increase in NI was “self-defeating” and a blow to struggling small businesses.
Defending the trip as a victory for UK businesses, Reeves said the government had secured new contracts in “vaccine approval, fertiliser, whiskey labelling, legal services, automotive and accountancy”.
He argued that the visit would expose him to China on human rights and trade concerns.
“You can’t raise tough issues if you’re not in the room,” Reeves said.
On Monday, Sir Keir Starmer said he had “full confidence” in Reeves and that the government was sticking to its fiscal rules.
But Conservative leader Cammy Badenoch accused her of refusing to back him when she refused to answer at a press conference whether she would stand for the post at the next election.
Downing Street Later confirmed The Prime Minister intended to retain Reeves as his Chancellor for the duration of this Parliament.