

Coffee House Shots: Reeves's worst week so far?
Jan 18, 2025
Rachel Reeves is facing a challenging week with unprecedented borrowing costs and stagnant GDP. Despite the criticism, she appears politically resilient. The podcast dives into the Bank of England's missteps in managing inflation and discusses the complexities of state pensions amidst rising costs. It also analyzes the effects of recent data on inflation and the implications of austerity as new Labour MPs navigate these turbulent economic waters. Striking graphs from data experts enhance the dialogue on the UK's financial future.
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High Borrowing Costs
- UK government borrowing costs are at a 30-year high, exceeding levels seen during Liz Truss's mini-budget.
- High borrowing costs are unsurprising given the national debt nearing 100% of GDP, impacting investor confidence.
Reeves's Political Maneuvering
- Rachel Reeves had a good week despite the dire economic situation, partly due to the opposition's ineffective attacks.
- Reeves continues to blame Truss for the economic downturn, a tactic that deflects criticism of her own budget.
Miscalculations and External Factors
- Both Reeves and Truss miscalculated market reactions to their medium-term plans, assuming investment and growth would follow financing.
- External factors like Donald Trump's tariff threats also impact borrowing costs, but high UK debt amplifies their effect.