Starmer backs Reeves and warns of 'ruthless' public spending cuts

Chancellor under pressure after difficult week in the markets

- Pippa Crerar, Jessica Elgot

Rachel Reeves will remain chancellor until the next general election, Keir Starmer has insisted, as he warned the Treasury would be "ruthless" over public spending cuts to help meet the government's fiscal rules.

The Treasury is looking for billions of pounds of savings from departmental budgets to balance the books at this summer's spending review, after another difficult day on which the cost of government borrowing rose and the value of the pound fell.

Starmer said Reeves was "absolutely right" to take a tough approach to public spending after a bruising week in the markets and concern among some Labour MPs over her plan to get the economy back on track.

"Yes, we will be ruthless, as we have been ruthless in the decisions that we've taken so far," the prime minister said at the launch of the government's artificial intelligence action plan in east London.

"We have got clear fiscal rules, and we are going to keep to those fiscal rules, and that's why the chancellor was absolutely right in the words that she chose to describe the approach that we will take."

In a speech to the Institute for Government next week, Darren Jones, the chief secretary to the Treasury, will warn cabinet colleagues that they will be expected to make sweeping changes to public services as part of the spending review.

He is expected to say: "I don't accept the idea that we should just keep spending more for poor outcomes. Taxpayers, and the users of public services, deserve better.

"We therefore won't settle for doing things the same and hoping for a different outcome - we've seen that play out, with a £22bn black hole in the public finances and public services on their knees. We have to do things differently - and we will."