Rachel Reeves today met with Britain’s top bankers as she continues her scramble for economic growth.
The Chancellor met with bosses from JP Morgan, Blackrock, Abrdn, Morgan Stanley, Goldman Sachs, Citi, Fidelity and Schroders in Downing Street this morning.
She told the City chiefs she wants to go ‘further and faster’ to drive growth in the UK, with GDP having increased by only 0.1 per cent in the final three months of last year.
This followed no growth at all between August and September 2024, which had left Britain at threat of recession.
Ms Reeves has been accused of ‘killing growth’ by battering businesses with her tax-hiking Budget in October last year.
She was hit by a fresh blow this morning when newly-published figures showed inflation jumped to its highest level for 10 months in January.
This sparked claims the UK is at risk of a ‘new era of stagflation’, which is used to describe a combination of high inflation, stagnant growth and high unemployment.
Ms Reeves – who has faced fresh scrutiny this week about the accuracy of her CV – is under huge pressure ahead of her spring statement next month.
In order to keep within her ‘iron-clad’ fiscal rules, the Chancellor is likely to have to cut spending by more than she planned if she wants to dodge further tax hikes.
Amid stalling growth and spiking debt interest costs, Ms Reeves is believed to have seen the near-£10billion ‘headroom’ she built into her sums in October completely wiped out.
In her breakfast meeting with investment bankers and asset managers in No11 this morning, the Chancellor held talks over her ‘financial services growth and competitiveness strategy’.
She outlined changes, pencilled in for October 2027, that would mean a typical securities trade – such as buying and selling shares – would be settled the day after it is agreed under a ‘T+1’ standard.
This would be instead of the current two-day standard and would bring the UK into line with key international markets such as the US.
Ms Reeves said: ‘I am determined to go further and faster to drive growth and put more money into people’s pockets through our Plan for Change.
‘Speeding up the settlement of trades makes our financial markets more efficient and internationally competitive.’
Nikhil Rathi, chief executive of the Financial Conduct Authority, said: ‘We highlighted how the move to T+1 will make our markets more efficient and support growth in our recent letter to the Prime Minister.
‘We will support industry as they move to T+1 and expect firms to engage and plan early.’
Andrew Bailey, the Governor of the Bank of England, said: ‘Shortening the UK securities settlement cycle to T+1 will bring important financial stability benefits from reduced counterparty credit risk in financial markets.
‘It is important that firms and settlement infrastructures have robust plans for an orderly transition in October 2027.
‘As part of this effort, the Bank looks forward to continuing dialogue with regulators in other markets which are pursuing similar changes.’
Ms Reeves meeting came after the Office for National Statistics revealed the rate of CPI inflation rose to 3 per cent in January to reach its highest level since March last year.
Transport costs – such as air fares and petrol prices – were among the biggest drivers of the higher rate of CPI inflation, which had stood at 2.5 per cent in December.
The price of food and non-alcoholic drinks also rose in the year to January to push up the overall inflation rate.
And the ONS pointed to a rise in private school fees, which Labour has now made subject to VAT as part of their tax-raising plans, as another driver of inflation.
The CPI rate for the 12 months to January was higher than predicted by analysts, who had forecast a rate of around 2.8 per cent, and was at its highest level for 10 months.