The failure of rachel reeves as borrowin g hits record high

追加: 2026-05-09

[00:00:01]If you need any further proof that Rachel Reeves is useless, here it is.

[00:00:06]There are three points to make about Rachel Reeves and the surge in borrowing costs which was announced this morning.

[00:00:14]Each cuts against the defense that might be offered by the Treasury. Firstly, the scale of the problem is no longer something that anybody can argue about.

[00:00:23]The numbers are stark. 30-year guilt yields have climbed to around 5.8%. 8% the highest level since 1998.

[00:00:33]10-year yields sit above 5%. Debt interest payments exceed billion pounds a year. The UK now faces the highest borrowing costs in the G7.

[00:00:45]This matters for a simple reason. When yields rise, the state pays more to borrow. Every extra percentage point drains billions from the budget that squeezes public services or forces tax rises. Markets are not behaving irrationally. They are pricing risk.

[00:01:01]They see persistent inflation, weak growth, and uncertainty in fiscal direction. They also see a government that has not yet convinced investors it has control. Two years into office, two years, the expectation was clarity and stability. The promise was clarity and stability to be better than what we'd had. Instead, the UK has become the worst performing major bond market during the recent energy shock. That is not a global story alone. It is a credibility story. You can turn around and you can blame the previous government as much as you want, but in the end you have to take you've after two years you have to take responsibility for the chaos that is sitting around you and that chaos is Rachel Reeves.

[00:01:49]Secondly, the external defense does not hold. Supporters of Reeves point to the Iran crisis and the disruption in the Strait of Humuz. Oil prices above $100 feed inflation. Central banks respond with higher rates. Bond yields rise everywhere. All true. All true. Yet the UK has been hit harder than its peers.

[00:02:10]The spread between UK guilts and German buns has widened sharply. traders are demanding a premium to hold British debt.

[00:02:20]So it's fine to say, "Oh yes, we've got this problem with Iran. We've got this problem with the Straight of Hormuz, but so does every other European country, and other countries have done better."

[00:02:32]That premium reflects structural weakness. The UK entered this crisis with higher inflation than most advanced economies. It has deep exposure to energy prices. Growth remains fragile, but there's also a political premium.

[00:02:49]Markets see elections approaching. They hear talk of loosening fiscal rules.

[00:02:54]They observe internal debate within the Labor Party about more spending, new taxes. Investors do not wait for policy to change. They price the risk in advance. And that is why yields move before decisions are made because people are jumpy are jittery about Rachel Reeves.

[00:03:13]It doesn't matter what excuses she makes. She uh is enthroned on a chair of chaos and has been pretty well since the beginning.

[00:03:27]One might have given her some benefit of the doubt in the first few days of office, but not any longer. Not after 2 years. The chancellor's fiscal rules were meant to anchor confidence. Debt falling as a share of GDP. no borrowing for dayto-day spending. In practice, rising yields are eroding the headroom needed to meet those rules. And she is responsible for a series of very stupid policies that have hit businesses, that have hit investment, that have hit our country.

[00:04:00]Stupid policies.

[00:04:03]A policy that exists on paper but cannot survive market pressure does not reassure. It exposes weakness.

[00:04:11]And thirdly and finally uh you know because the point is it doesn't matter whether you support the Labor government whether you whether you support the Labor Party the Conservative Party the Greens reform whoever you support in the end you also support the country and Rachel Reeves is the chancellor for the country and she should be able to command respect on that alone. But she can't.

[00:04:43]She's either weeping on the front benches of the uh of the commons or she is performing some incompetent policy based on ideology rather than common sense.

[00:04:58]And that is the fundamental problem. And that's why I keep coming back to things like private schools and VAT because she instead of instead of promoting growth, she has destroyed something that is working. And you can go round her policies and you can see the same approach again and again and again. Destruction rather than construction.

[00:05:24]And by the way, Reform UK has much the same instinct. destroy, destroy, destroy rather than build something better that makes the problem irrelevant.

[00:05:40]So I I have no problem, for example, with improving schooling to the extent that private schools are unnecessary and unwanted.

[00:05:51]But the Rachel Reeves approach has got the cart before the horse and that is part of the problem and I can't see it improving even with a change in uh uh in um in in in in the people who are actually running this this program. The problem is the ideology that underpins it and that is perhaps a labor problem.

[00:06:21]it doesn't need to be. And the impression that we got at the general election was that Labour had abandoned that idea and was going to be a steady pair of hands. But that is not what has happened.

[00:06:34]Um, so this is a failure of strategy, not a moment of bad luck. And that's the third and final point which needs to be emphasized. A competent chancellor sets the tone early. Markets look for three things. credibility, consistency, and growth. On credibility, Reeves has struggled. The message has shifted between caution and intervention.

[00:06:58]Internal voices call for more spending, more state involvement, new tax ideas.

[00:07:03]It creates noise. Markets punish noise on consistency. The government faces contradictions. It promises fiscal discipline while exp while expanding commitments. It hints at long-term restraint while reacting to short-term pressures. Investors see tension, not coherence. On growth, the record is thin. Borrowing is high, yet there's little visible return in productivity or investment. Debt without growth is the worst combination. It raises risk without building capacity to repay. The result is a vicious circle. Higher yields increase debt servicing costs.

[00:07:39]Higher costs reduce fiscal space.

[00:07:42]Reduced space limits growth investment.

[00:07:45]Weak growth then justifies higher yields. Breaking that cycle requires authority and clarity. At present, neither is evident. The defense that this is all global does not survive scrutiny. Other countries face the same oil shock. They have not seen the same scale of market reaction. The UK is being singled out because of the stupidity of the people in charge. That is the judgment of investors, not critics. After two years, a chancellor should have established trust. Instead, markets demand a premium to lend. Debt rises. Rewards do not follow. And that is why this criticism lands not because borrowing has increased in isolation, but because it has increased without confidence, without growth, without a convincing plan. And all of that is down to the failure of Rachel Reeves.