Reeves warns incoming PM Burnham of economic shocks as UK transitions
Outgoing Chancellor Rachel Reeves has warned Andy Burnham he faces a turbulent economic inheritance as he prepares to take over as UK prime minister in just over a week.
Rachel Reeves has warned Andy Burnham that he must have a "worked-through plan" when he enters Downing Street in a little more than a week, as Britain prepares for a sudden transition of power after just two years of Labour government.
The handover comes at a highly fragile moment for the UK economy. While Reeves claims she is leaving an economy "much stronger" than the one she inherited, the underlying data presents a mixed picture for European investors and trading partners.
Government borrowing costs have fallen and infrastructure investment has increased. However, inflation remains above target and is expected to rise, growth has been sluggish, and the Bank of England recently warned that interest rates might need to go up again.
Public debt is now projected to be higher at the end of this parliament than when Labour took office. Furthermore, official ONS figures show that disposable income is falling, keeping severe pressure on household and corporate spending power.
The outgoing chancellor's relationship with the business community has also deteriorated, primarily following her decision to hike National Insurance taxes for employers. One City source said the move had an immediate effect on hiring: "There was so much goodwill, but it was genuinely staggering - it just went in a few weeks."
Reeves, who became visibly emotional during a parliamentary session last July, acknowledged the impatience of the British public. "People are impatient for change - I'm impatient for change and I totally get that people want to see their lives changed faster," she told the BBC.
The rapid exit of Keir Starmer's government has been blamed partly on economic missteps, such as the initially blanket removal of the winter fuel allowance. A senior Labour figure noted that Reeves had "underestimated the desire for radical change, and lacked political nous."
A former senior minister added that Reeves had spent too much time blaming her inheritance, only to find herself trapped by tight public finances and a low-growth economy without the political capital to enact welfare reforms.
As Burnham prepares to take charge, Reeves urged him to remain focused. "Governing is hard in Britain, and lots of challenges and shocks will come his way," she said, stressing that his team must be "really clear about what they want to achieve."
