British Prime Minister Keir Starmer has vowed to uphold strict fiscal rules in a bid to calm market nerves over the future of Chancellor Rachel Reeves. Speaking on Thursday (3.7.2025) to Virgin Radio UK, Starmer reaffirmed his confidence in Reeves, saying, “She is an exceptional Chancellor — she will remain Chancellor for a long time yet, until the next election and beyond.” He emphasized that both he and Reeves are fully committed to fiscal discipline and economic stability, calling it the ‘bedrock’ upon which everything else is built.
Starmer’s comments come after speculation that Reeves might be replaced triggered a fall in UK bonds, the pound, and stocks on Wednesday. The uncertainty followed an emotional appearance by Reeves in Parliament the day after a major policy reversal left a hole in her spending plans. Starmer insisted that her tears were due to a ‘personal matter’ unrelated to politics or any internal party tensions.
UK bonds rallied Thursday morning following the Prime Minister’s public show of support, with the pound leading gains against its peers and equities rebounding strongly. The rally outpaced movements in the eurozone markets.
One day before the anniversary of Labour’s landslide election victory, Starmer is set to publish a decade-long health plan, one of the flagship policies from the party’s campaign promising transformative change. However, attention remains fixed on Reeves and the state of Britain’s finances.
In a BBC interview, Starmer refused to comment on how Reeves would fill the gap in her plans caused by Tuesday’s U-turn on welfare reforms aimed at saving £5 billion ($6.9 billion). That reversal came amid threats of a major rebellion within his own party.
When asked about Reeves’ wellbeing, Starmer said she was ‘fine,’ describing her as ‘very resilient and strong.’ Despite his insistence that she remains in post, bookmakers have already begun placing bets on possible successors, including Pat McFadden and Darren Jones.
However, Wednesday’s market reaction suggests replacing a chancellor carries risks without necessarily offering upside for Starmer, whose Labour Party trails the populist Reform UK led by Nigel Farage in polls.
“You see in the polls that the political fortunes of both Starmer and Reeves are very much tied together,” said Luke Tryl, director of the British polling firm More in Common, on BBC Radio 4’s Today program. “I don’t think it’s obvious that a change in chancellor would help Starmer much.”