Chancellor defends flying to China amid market turmoil

A defiant Rachel Reeves has defended flying to China for a business trip in the face of fears that Britain is heading for an economic crisis.

- KATE DEVLIN, DAVID MADDOX and MILLIE COOKE

As the pound hit a new 14-month low and the cost of government borrowing rose again, Ms Reeves faced calls to cancel her trip and remain home to deal with the market turmoil.

But she insisted the visit was “in the national interest” as the government scrambles to boost economic growth. Growing the economy was “front and centre” of the minister’s plans and would come through “careful pragmatic cooperation with international partners”, she said.

“By finding common ground on trade and investment while being candid about our differences and upholding national security ... We can build a long-term economic relationship with China that works in the national interest,” she added.

The trip is controversial just weeks after it was revealed that an alleged Chinese spy had become a close confidant of the Duke of York. But The Tories have accused Ms Reeves of being “missing in action” while the Liberal Democrats said she should announce an economic “plan B”.

The highly respected Institute for Fiscal Studies think tank also warned Ms Reeves could face “unenviable” options, blaming the economy she inherited and global factors but also “a series of government choices and mutually incompatible promises”.

Ben Zaranko, associate director at the IFS, also suggested Ms Reeves had boxed herself in with a “highly undesirable” tax and spending policy that left little of what is termed “headroom”.

Former deputy governor of the Bank of England Sir John Gieve warned the chancellor could face difficult decisions ahead including potentially “severe” squeezes on public services.

“The choice she’s going to face ... is can I raise borrowing – and the increase in interest rates that’s happened now, if it continues, will decrease her scope for doing that within her rules – or do I increase taxes again, or do I actually institute some very severe reductions and squeezes on public services,” he said.