Rachel Reeves was left squirming after being asked ‘who is running the country?’ as she was grilled over her upcoming spring statement. The Chancellor was forced to admit the economy isn’t growing fast enough and the government needs to do more.
She said would not pre-empt the updated economic forecast she will be responding to in her spring statement, but claimed that “the world has changed” and the Government will respond to that. Ms Reeves was asked about reports that the Office for Budget Responsibility could slash the growth forecast by as much as half and how seriously her fiscal headroom had been hit. “I’m not going to pre-empt the Office for Budget Responsibility’s forecast, but the world has changed,” the Chancellor told Sky News’ Sunday Morning with Trevor Phillips.
“We can all see that before our eyes and governments are not inactive in that – we’ll respond to the change and continue to meet our fiscal rules.
“But we’re also shaping the new world, whether that’s in the defence and security realm, or indeed on the economy.
“I promised at the general election to bring stability back to the economy.”
The Chancellor also rejected claims that living standards are falling.
She was asked about a report from the Joseph Rowntree Foundation predicting a huge drop in living standards by the end of this parliament.
Ms Reeves told the programme: “I reject that and the Office for Budget Responsibility will set out their forecast this week.
“Living standards in the last parliament were the worst ever on record.
“I’m confident that we will see living standards increase during the course of this Parliament, what we’ve already seen in these last few months of the Labour Government is a sustained increase in living standards.”
Facing questions about “doom and gloom”, Chancellor Rachel Reeves told Sky News’ Sunday Morning with Trevor Phillips programme: “Imagine if I’d have swept the problems under the carpet and said everything was fine, then today, when we face the aggression from Russia, we wouldn’t have the additional money to spend on defence.
“We would be in a situation where NHS waiting lists would continue.”
Ms Reeves later added: “If the public finances weren’t on a firm footing, we would have to be raiding budgets to prop up the public finances. Instead, we were able to redirect money from international development to defence spending and the Bank of England had the confidence to cut interest rates three times since the general election.
“That would not have been possible unless I had delivered a budget that brought stability back to the economy.”
The Chancellor continued: “I have returned stability to the economy.”
She warned it is “not possible” to “reverse more than a decade of economic stagnation” in a matter of months.
She told Sky News’ Sunday Morning with Trevor Phillips programme: “Things have changed since the general election. We’ve had cuts in interest rates, not hikes in interest rates, and wages are rising faster than inflation.
“That was not the case in the previous parliament, which was the worst on record for living standards, but are you saying ‘do we need to do more to grow the economy, to address the cost-of-living crisis?’
“Absolutely we do. That is why we are reducing bureaucracy and regulation, it’s why we are reforming the pension system to bring more money into the economy and so much more.”
Ms Reeves said she was “not satisfied with the numbers that we see at the moment”, adding: “It’s not possible within just a few months to reverse more than a decade of economic stagnation, but we are making the changes that’s necessary to get Britain building again, to bring money into the economy.”
The Chancellor said last year’s international investment summit brought more than £60 billion of investment into the United Kingdom as she outlined the Government’s “commitment at the budget to spend £100 billion more on infrastructure during this Parliament, the creation of a national wealth fund to leverage in private-sector money into our economy”.
