Why Rachel Reeves’ tears have made her job more secure than ever
Keir Starmer, and the Labour government, are on damage-control following a week of rebellion and rising emotions, but can they turn the narrative to their favour and convince people of their wins since entering Downing Street?
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In brief…
- Rachel Reeves has said her tears in the House of Commons were due to a “personal issue” and joked about having bad days at work on TV.
- Following her emotional moment, the response of the UK markets has revealed a close link between Reeves' role as chancellor and the perception of the country’s economic stability.
- The News Agents say that while she appeared vulnerable during Prime Minister’s questions on Wednesday, in the 24 hours since, Reeves now appears more secure than ever in her job.
What’s the story?
Everything is fine in Downing Street. Labour are doing a great job. Rachel Reeves will be chancellor of the exchequer for years to come.
That's the message from Keir Starmer, 24 hours after Reeves cried on the front bench in the House of Commons, 36 hours after scraping a narrow – and deeply diminished – victory in a vote on welfare reforms.
Speaking on Thursday (3 July), Starmer admitted he had failed to engage with backbench MPs on plans to cut £5 billion from the government's welfare costs.
The PM has denied all suggestions that Reeves' days in her role are numbered, or that she intended to resign, saying he believed she would remain chancellor for the rest of this Parliament – and beyond.
Reeves has said her upset was due to a “personal issue”, adding that she is “having a tough day it's on the telly and most people don't have to deal with that."
But despite how public her “tough day” was, could it be that she is now more secure in her job as chancellor than she was before she cried on TV?
How did the markets respond to Reeves crying in the Commons?
Reeves’ tears resulted in widespread rumours that her days as chancellor were numbered, prompting a drop in the stock markets, the value of the pound and an increase in the cost of government spending.
This recovered quickly once reassurances came from Starmer that her job was secure, suggesting that the UK’s economy is inextricably linked to Reeves’ role as chancellor.
“I think the reason is, because the markets consider Rachel Reeves so politically tied to her fiscal rules, that if she were to be removed she could be replaced by someone who was not so attached,” says Lewis Goodall.
“Rachel Reeves, at that moment, had never looked more politically vulnerable, and yet now has never looked politically stronger.
“The Prime Minister and other government ministers have been forced, in fear of the markets, to say she will be in post for a very long time.”
Emily Maitlis says the UK markets may believe that if Reeves leaves, she could be replaced with someone more left wing – and less committed to strict rules on borrowing and spending – which could impact shared goals of economic recovery.
What next for Labour, and Rachel Reeves?
The News Agents believe Reeves’ tears have ultimately been a good thing for her career – for now at least.
“Rachel Reeves has ended up buying herself some breathing room,” says Lewis.
“One of the paradoxes of the past 24 hours is that she has been cemented in place, which has calmed the markets.”
And it’s in instances like this that it becomes apparent how large the shadow of Liz Truss still looms over British politics – with the memory of how responsive movement from the markets can end a government instantly.
“The fact of the matter is, because of the Liz Truss debacle, we are still living in the cross hairs of the international capital markets,” Lewis adds.
“One wrong move, and you get contagion in those markets, and suddenly you have a run on a pound.”
But while Labour and its chancellor have been seemingly supported by the actions of the stock markets, where Truss’s Tories were obliterated, Lewis adds that the events of the week must still act as a steep learning curve for Starmer and his government.
“The fact of the matter is, the Labour Party is governing in a time of scarcity, and that's something it is fundamentally uncomfortable with,” he says.
“It needs to wake up to the fact that we are a couple of moves away at any given time from a fiscal crisis, which ultimately will destroy this Labour government if it gets out of control.”