I recently totted up all the mistakes Reeves had made since the general election but decided to stop at 20 because it was a nice round number. I could have gone on and on.
Underlying them all is the failure to understand that the UK relies “on the kindness of strangers”, in the words of former Bank of England governor Mark Carney.
By strangers, he meant the global bond market. We have to keep international investors sweet to encourage them to lend us the money we need to fund government borrowing.
When Reeves and PM Keir Starmer made the unbelievably stupid decision to talk down the UK economy after winning the election, they put those strangers on red alert.
It made them think that the UK was a basket case and lending us money is a risky bet.
That’s a disaster, because Reeves plans to tap bond markets for a staggering £300billion in the next tax year. Now they’re demanding a premium for doing so.
I don’t blame them. With Reeves in charge, I’d demand a premium rate of interest too.
In doing so she’ll blow her own borrowing rules to pieces and taxpayers will have to plug the shortfall. If she doesn’t hike taxes this spring she’ll have no choice by the autumn.
This morning, the Treasury held the biggest sale of five-year government bonds in more than a decade, to fund Reeves spending plans.
In exquisitely bad timing, it had to sell these bonds on a day when UK borrowing costs rocketed to a 27-year high.
This morning, yields on 10-year UK government bonds, knowns as gilts, hit 4.707%. That’s far higher than the 4.22% that marked the end of under lettuce-brained former Tory PM Liz Truss.
Both are down to our useless Chancellor.
As I wrote yesterday, her tax-and-spend policies have left the UK on a knife edge. Just a few days ago, she had a mere £9.9bn fiscal headroom before she has to raise taxes.
That’s now fallen below £1billion thanks to her inflationary Budget and borrowing splurge. That’s a tiny sum for a £2.6trillion economy.
On March 26, the Office for Budget Responsibility is likely judge that Reeves will miss her main fiscal rule, according to economists Ruth Gregory and Alex Kerr.
If she does, we’ll be in even deeper trouble than we are now.
Reeves is borrowing record sums at the highest rate of interest this millennium at a time when the economy is shrinking. That’s all down to her.
The Tories undoubtedly left a mess but Chancellor Jeremy Hunt had started to clear it up, with the economy UK growing in the first half of last year.
Now it’s going into a downwards spiral and the only way she can make her sums add up is to come back for another round of tax hikes.
She certainly can’t borrow more. The bond markets would go berserk.
Autumn tax hikes will be far more brutal than last year’s. Worse, they won’t even work.
All they will do is show to the well that the UK is in an even bigger mess then Bond investors realised. So they’ll demand even more interest to lend us the cash we need to stay afloat.
What a nightmare. What a Chancellor.