It’s terrifying that she is in charge of the finances of a major Western economy given the yawning gap between her high-flying CV and low-grade finance career. She’s been hopelessly out of her depth from day one.
Her first big move, scrapping the Winter Fuel Payment for pensioners on as little as £11,350 a year, was political suicide. Her maiden Budget was economic suicide. Reeves hiked taxes by £40billion and borrowed another £30billion, and still can’t balance the books.
The fallout sunk businesses, destroyed jobs, torpedoed growth and more than doubled inflation.
The jobs market is hellish today. Employers are cutting roles at the fastest pace in four years and redundancies are expected to accelerate next year.
Reeves did this while claiming: “I have sought to protect working people.”
Now she’s plotting another £25billion of tax rises in November, and possibly more, risking a fiscal doom loop.
Terrifying as that all is, it is not the most frightening thing about Rachel Reeves.
Starmer should sack her, but can’t bring himself to do it. Why? Because there’s nobody in the Labour Party who could replace her.
Nobody.
Incredibly, the woman mocked as “Rachel from accounts” is the most serious financial thinker Starmer has.
Not a single one of his senior ministers has experience of running a successful private business. One or two have picked up financial knowledge in think tanks, academia or the public sector, but that’s not the same thing. None has lived with the risks and pressures of business life, and it shows.
Take Torsten Bell. After a decade running the Resolution Foundation, he was parachuted into a safe Labour seat last year and is now pensions minister.
All he ever did there was rock up at fancy policy symposiums with his endless list of taxes he’d like to hike. That’s what passes for financial expertise under Starmer. Heaven help us.
The alarming truth is that Reeves is the best Labour can offer. She at least seems dimly aware that the Treasury cannot endlessly pile taxes onto working people. Last December she even told the Confederation of British Industry: “I’m really clear: I’m not coming back with more borrowing or more taxes.”
Starmer swiftly slapped her down. It was a stupid thing to say given the expanding black hole, but what’s scarier is that nobody else in Labour would even think it.
All backbenchers and the party’s resurgent left want to do is tax, tax, tax.
Labour made a half-hearted attempt to cut the spiralling benefits bill, but targeted savings of £5.5billion a year have evaporated entirely.
Each time Starmer looks close to moving against Reeves, gilt yields and borrowing costs rise as markets panic over what follows. They know Reeves is the best Labour has too.
The PM has now surrounded himself with a string of supposed financial experts, but none of them have worked in business either. Just the usual think tank dreamers and committee hoppers.
Rachel Reeves and Keir Starmer are stuck with each other. And we’re stuck with them. Nothing will change while Labour remains in power, unless the gathering financial crisis forces them both out.