PMQs: Starmer rules out emergency budget as he defends his chancellor

Sir Keir Starmer has said he is committed to only having one budget this year as he quashed suggestions of an emergency financial statement.

Conservative leader Kemi Badenoch asked the prime minister if he stands by Chancellor Rachel Reeves’s commitment to only have one budget this year following “talk in the city she can’t meet her fiscal rules and there will need to be an emergency budget”.

Ms Reeves’s future has been questioned over the past week as government borrowing costs soared and the pound fell, but Sir Keir backed his chancellor.

Politics latest: PM fights back after week of turmoil

Speaking at Prime Minister’s Questions, he said: “The chancellor will be in place for many, many years to come.

“We’ll have one budget. That is what we’re committed to. Strong fiscal rules.

“I will stick to them, unlike the party opposite.”

While on a trip to China over the past week, Ms Reeves said she would not be altering her economic plans.

“The fiscal rules laid out in the budget are non-negotiable. Economic stability is the bedrock for economic growth and prosperity,” she said.

Earlier this week the Lib Dems urged Ms Reeves to hold an emergency summit with lenders to reassure mortgage holders as market turmoil continued.

Long-term government borrowing costs (gilt yields) reached a more than 26-year high on Monday, while the pound fell against the dollar to a near 15-month low.

But the chancellor received some reprieve on Wednesday thanks to inflation unexpectedly coming down to 2.5% after rising for two months. It was expected to increase to 2.7%.

As a result, sterling recovered as it rose to 1.2241 against the US dollar from an early low of 1.2161 and guilt yields fell.

Inflation analysis:
Good news could be quickly erased

Ms Reeves faced calls to not go on her trip to China and was accused of refusing to “face up to her own failures” by the Conservatives during a week of market turbulence.

On Tuesday, she dismissed the criticism and vowed to stick to the fiscal rules she set out in the October budget – balancing the budget so day-to-day spending is covered through tax receipts, and getting debt down as a share of the economy.

“We remain committed to those fiscal rules and we will meet them at all times,” she said.

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Ahead of inflation rising on Wednesday morning, the British Retail Consortium (BRC), which represents two-thirds of the UK’s top retailers, warned its members will have to raise prices to cope with rising tax bills due to Ms Reeves’s October budget.

The BRC, whose members include Marks & Spencer and Boots, said 67% of the 52 finance bosses they surveyed said they would raise prices in response to increases in employers’ national insurance contributions from April.

Just over half said they would be reducing their paid numbers of hours and overtime, 46% said they would have to reduce staffing numbers, and 31% said increased costs would lead to further automation.

The tax aims to raise £20bn for the Treasury by lowering the threshold at which it is paid from £9,100 to £5,000.