The chancellor isn’t going anywhere – but clinging to Treasury orthodoxy threatens Labour’s transformative growth agenda

Rachel Reeves’s decisions don’t warrant her departure, but her missteps are steadily eroding her credibility. She entered office with public support and was tasked with repairing a country bruised by 14 years of Conservative rule. Ms Reeves’s embrace of fiscal discipline was cast as necessary to reassure markets and prevent capital flight. But this – and her emphasis on spending cuts – points to a fundamental misdiagnosis of Britain’s problems.

Sensing an opportunity, the Conservatives laid a trap and Ms Reeves walked into it. When the opposition encouraged speculation that rising bond yields would put the chancellor on track to miss her fiscal rules, the government backed “ruthless” state-shrinking as the appropriate remedial action. Ms Reeves should have immediately pointed out that the movement in long-term UK rates was down to an international shift in bond prices. She erred in thinking that claiming to be “tough” on public spending would earn her praise from the rightwing media. This lapse instead damaged her political standing, and only on Tuesday did she acknowledge her mistake, insisting global factors were largely behind rising UK government borrowing costs.