Displaying items by tag: welfare reforms

Financial markets reacted sharply this week after Rachel Reeves appeared tearful during Prime Minister’s Questions, after the Government’s sudden U-turn on welfare reforms. Sterling fell by 1% against the dollar, while UK borrowing costs surged in one of the largest single-day moves since the market turmoil following Liz Truss’s 2022 mini-budget. The welfare reversal has left an almost £5 billion gap in Reeves’s fiscal plans, prompting investor concerns about how the Government will balance the books. While Downing Street insisted Reeves retains Starmer’s full support, analysts say the episode highlights market anxiety over potential leadership instability and future fiscal policy. Speculation mounted about possible tax rises in the autumn, though ministers reiterated pledges not to increase income tax, VAT, or National Insurance. Despite the turbulence, experts noted that markets are not as fragile as during the 2022 crisis.