Chancellor Rachel Reeves embarks on a high-stakes trip to China, aiming to bolster trade and economic relations. Her planned meetings with China's Vice Premier, He Lifeng, in Beijing and discussions with UK firms in Shanghai underscore the importance of this diplomatic mission. However, the journey has sparked criticism from some Conservative members who argue that Reeves should prioritize addressing the pressing economic challenges at home.
The government is eager to revive an annual economic dialogue with China that has been dormant since the onset of the pandemic. This initiative aligns with the broader strategic goals of enhancing bilateral trade ties. Yet, domestically, the UK faces rising interest rates on government bonds since August, pushing borrowing costs to their highest levels in several years. Critics argue that these economic challenges demand immediate attention from the Chancellor.
Reeves' commitment to making significant tax and spending announcements solely at the autumn Budget has come under scrutiny. Shadow Chancellor Mel Stride accused her of being "missing in action," stating she should have remained in the UK to address these pressing economic issues. Meanwhile, Chief Secretary to the Treasury Darren Jones defended the trip as "important" for UK trade and asserted there was "no need for an emergency intervention."
Joining Reeves on this mission are senior financial figures, including the Governor of the Bank of England and the Chair of HSBC. This delegation highlights the trip's significance for the UK’s financial sector. Nonetheless, Conservatives criticize Reeves for prioritizing international diplomacy over domestic financial stability, particularly as government borrowing costs soar and the pound's value declines.
"wouldn't personally recommend the chancellor cancels her trip to China. This can wait until she gets back next week."
— Philip Hammond
The Chancellor’s fiscal strategy may involve further spending cuts, potentially announced in her planned fiscal statement on March 26. Departments have already been tasked with achieving efficiency savings worth 5% of their budgets. Meanwhile, bond yields continue to rise, with the 10-year bond reaching its highest yield since 2008 and the 30-year bond peaking since 1998.