Hi there, this is Ailbhe Rea, a Bloomberg UK Associate editor based in Westminster.
Rachel Reeves, if you’re reading, look away now. The Readout is unavoidably gloomy today on the task facing the Chancellor, after two pieces of news that highlight the scale of the challenge she faces: government borrowing has come in higher than forecast and consumer confidence has fallen sharply, in the steepest dip since Russia invaded Ukraine.
Reeves is effectively caught between a rock and a hard place, as she prepares for her first budget at the end of October. She has repeatedly promised economic stability based on tough spending rules, with the borrowing numbers today suggesting she’ll have to bring in tax rises and spending cuts to meet them. On the other hand, she and Keir Starmer want to stimulate economic growth to the highest rate in the G-7. The sudden collapse in consumer confidence this month suggests her gloomy warnings about a dire inheritance and a “painful” budget ahead may be undermining the growth goals. (My colleaguePhilip Aldrick explains in more detail why the consumer gloom seems to be more down to Reeves’ messaging than realities in the economy.) Business will be looking for a change of tone from Starmer and Reeves at the Labour Party conference this weekend, but the economy won’t be the only shadow over the occasion. This very new government is going into its first conference in power at a time of infighting within Number 10 over the role of Sue Gray, the prime minister’s chief of staff (Alex Wickham and I will be spilling the beans tomorrow on that). The government is also suffering from a steady drip of uncomfortable stories about freebies, donors and access (make sure you catch up with our profile of Labour donor Waheed Alli, a key focus of the controversy). Next month’s budget will loom over everything. Minister after minister will be appearing on panels without knowing the final settlement for their department, while subtly (or not so subtly) making the case against cuts in their area. They, their advisers and the other MPs — let loose among journalists in a confined environment with lots of warm white wine — will be opening up about issues such as the unpopular cut in winter fuel subsidies earlier this month. It’s the best time of the year to be a political journalist — and one of the most important moments in Rachel Reeves’ career. If you’re at the conference, do say hi. Want this in your inbox each weekday? You can sign up here. |