Rachel Reeves just saved her own neck – but next blow could still be fatal | Personal Finance | Finance

It’s been one drama after another since Rachel Reeves debuted at #11. Taxes have risen, borrowing has broken records, spending is in danger of spiraling out of control, and our national debt and deficit look scarier than ever. He inherited a stuttering economy, but almost everything he did made it worse. His brutal £66bn tax attack has slowed growth and increased unemployment. Careless borrowing spooked bond markets. Labor’s backbenchers threaten to shake at the first mention of spending restraint.

Reeves looked like a broken woman at times. He made life difficult for himself with broken promises regarding taxes and similar matters. Throwing money at an inefficient public sector was risky, and if we do it will take time to see the results of all this extra NHS spending. Prime Minister Sir Keir Starmer has forced him into a series of U-turns. Critics have repeatedly questioned his credentials. It’s surprising it’s lasted this long.

But for now, it looks like he’s saved his neck. He may even feel some satisfaction when he delivers his Spring Statement on March 3. Something went right late last week and he will take responsibility for it. But this rare good news brings with it a new challenge that may be the biggest of all.

The UK announced a record budget surplus of £30.4bn in January; This is the largest figure since 1993. Tax revenues have outstripped spending, and we all know why. Because Reeves brought these to record levels and brought the economy to a halt.

This was also helped by lower debt interest costs as markets predicted interest rates would fall. Borrowing totaled £112.1bn in the first 10 months of the financial year. This is still the fifth highest figure on record, but is below the Office for Budget Responsibility’s estimate of £120.4bn.

It’s a sign of how bad things have gotten that we celebrate a person who would horrify us in normal times.

The unemployment rate is still rising. Under Reeves’ watch, the rate rose from 4.1 percent to 5.2 percent, 600,000 people were added to benefits, and two million people are now looking for work. This is down to the disastrous £26 billion “jobs tax” and two inflation-busting minimum wage increases that have made companies think twice about hiring. Especially young workers.

Youth unemployment is at 16.1% and 739,000 young people are unemployed. This is a generational disaster triggered by Reeves.

Reeves will still claim the £30bn surplus is proof of merit. He will receive this honor whether he deserves it or not. This is his year as Chancellor, perhaps even improving his chances of surviving until the next election in 2029. It’s a scary thought.

But success breeds temptation. Left-wing Labor supporters will argue that the financial crisis has abated and now is the time to start serious spending. As pressure grows for more defense spending, they will push for more money to tackle child poverty, strengthen the NHS, fund bigger public sector pay deals, support Ed Miliband’s green projects and increase budgets for special education needs.

Reeves will try to back down, but his own party will demand he spend, spend, and spend again. They will want even higher taxes on business and wealth, despite the damage done so far.

If he acquiesces, this windfall may disappear and the bond markets may finally give up on us as a lost cause. Reeves got lucky. Better blow it now.