LONDON — Rachel Reeves’ power in the British government rivals even that of her boss. So how long can it last?
Reeves, the U.K.’s top finance minister, has been at the center of Prime Minister Keir Starmer’s project to remake the Labour Party and win back power at last year’s general election.
The pair have moved in lockstep to convince voters that Labour can be trusted with the economy — and to hammer home the message that they must take “tough decisions” to restore fiscal credibility.
Those tough decisions were on full display Wednesday, as Reeves announced deeper-than-expected cuts to welfare, and swallowed a downgraded 2025 growth forecast.
Reeves’ spring statement was originally intended as a minor update. But it grew in importance as it became clear the chancellor was on track to breach tight fiscal rules she set herself before entering office.
With the chancellor under increasing scrutiny against a gloomy economic backdrop, expect the Starmer-Reeves partnership to be tested like never before.
One Labour frontbencher, granted anonymity to speak candidly like others in this piece, said they thought there had been “more fractures in recent weeks than there have been for a while… I’m not sure it’s as clear-cut as it once was.”
Reeves’ rise
Starmer and Reeves present themselves very much as a double act.
But their relationship it is not underpinned by as deep a friendship as has been the case for other famous chancellor-and-prime-minister pairings in recent history.
Starmer met Reeves over breakfast shortly before he became party leader and decided she had to be in his shadow cabinet, according to Get In, a recent book on Starmer’s journey to Downing Street.
Steve Richards, a journalist and author of several books on British political history, observed that they “really didn’t know each other” before he picked her as his shadow chancellor.
That’s in stark contrast to the rapport built up between the Tories’ David Cameron and George Osborne — or Labour’s Tony Blair and Gordon Brown (whose own relationship would later veer off-course.)
Starmer “soon decided that [Reeves] was a figure who needed little scrutiny,” said Richards. “He revered her and gave her more space than any equivalent shadow chancellor.”
Rupert Harrison, who advised Osborne as chancellor, said it was essential to his boss’s time in office that Cameron and Osborne had “a strategy underpinned by the relationship between them.” Cameron was, he said, “incredibly personally committed to what we were doing on the economy.”
Reeves’ rise has continued since Labour took office and she became Britain’s first-ever female chancellor.
Luciana Berger, a Labour peer and former MP who served on the business committee with Reeves, said her determination could be traced back to her early days as a member of parliament, when she came across as “absolutely steadfast” and “data-focused.”
In the months after the election, several insiders observed that she appeared to assert her authority more quickly than the PM, and that her message about the need to shore up the British economy dominated above all else.
One official claimed Reeves had become emboldened to take charge of domestic policy in a way that made her appear like “the real prime minister.” She was blunt with senior colleagues — and even overruled officials from Starmer’s office, the same person said.
She has also established her own networks among MPs, hosting regular get-togethers in 11 Downing Street with backbenchers grouped by region and inviting back some seen as “friendly” to the Treasury, one invitee said.
‘A big gamble’
As Reeves cemented her grip on power, her handling of the public finances has come under increased scrutiny.
Her early move to withdraw cold-weather benefits from pensioners proved unpopular. Her first Budget — a pivotal moment for any new chancellor — raised taxes in a way her opponents charge has seriously hurt small and medium-sized businesses.
Increased taxes, increased borrowing and a large injection into public spending left Reeves with very little room for maneuver — and her options narrowed further with Donald Trump’s return to the White House, the U.S. president bringing with him major uncertainty about tariffs on allies.
Duncan Weldon, an economist and former Labour aide, described Reeves’ tax-and-invest strategy so far as “a big gamble which hasn’t paid off” because of a “combination of weaker-than-expected growth and higher-than-expected interest rates.”
In order to ensure Reeves could meet her fiscal rules, the government last week announced a set of welfare changes focused on benefits for disabled people. These have made many Labour MPs deeply uncomfortable — with the anger only rising Wednesday as the government published an impact assessment laying bare the likely effect of the cuts on families.
Reeves’ approach has caused disquiet in the ranks. One new Labour MP complained that cutting the winter fuel payment “is what people remember from our first six months” and voiced concern that further cuts would feed into the same narrative.
Toward independence?
As pressure mounts on the chancellor, there are hints that Starmer is beginning to assert his independence from his Downing Street neighbor.
Two people close to discussions over a recently announced rise in defense spending said the PM had insisted on the uplift taking place more quickly than Reeves had wanted.
A government official insisted Reeves had independently reached the same decision on the defense budget shortly after Starmer.
No. 10 Downing Street is also on a mission to boost its firepower by recruiting a senior specialist economic adviser, according to two people with knowledge of the process, aiming to fill a long-noticed gap in Starmer’s armory.
Allies of both Starmer and Reeves strongly deny any tension between them, pointing out that they have been meeting bilaterally for an hour or more at least once a week since the election — sometimes with aides and sometimes one-to-one.
A second government official said “you don’t ever see Keir voicing his displeasure with Rachel,” adding that he genuinely trusts her in forming economic policy.
Any threat to Reeves’ position seems remote, precisely because of how closely Starmer has aligned himself with her.
But that doesn’t mean their relationship won’t shift. Richards said it was “inevitable and unavoidable that, given the state of the economy, tensions are going to erupt” as painful negotiations over a major departmental spending review come to a head.
Harrison predicted “a much more difficult moment” later in the year as Starmer “may decide his ambitions require higher taxes, pitting him against her personal promise not to raise taxes.”
It is not all doom and gloom inside the Treasury, as some recent indicators give reason for cheer. Ministers remain convinced they are pulling all the right levers to stimulate growth and that they just need to stick to the plan.
Berger said: “She will know that she needs to prove the doubters wrong, but I think she is doing that very robustly.”
Yet, as Weldon spelled out, “the fear is that the growth forecast could be revised down again in October, and we end up back where we started doing this all again in six months’ time.”
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