(In the UK) Rachel Reeves’ Emotional PMQs Appearance and Reversal of Welfare Cuts Fuel Political and Financial Uncertainty

 

Rachel Reeves, the UK’s Chancellor of the Exchequer, has drawn widespread attention in the United Kingdom after appearing visibly emotional during Prime Minister’s Questions on July 2, 2025, amid intense backlash over her decision to reverse planned welfare cuts. The tearful moment, captured during a heated session in the House of Commons, fueled speculation about her future in the role, particularly as Prime Minister Keir Starmer initially hesitated to explicitly reaffirm his support for her. Despite Downing Street’s later insistence that Reeves “is going nowhere” and retains Starmer’s “full backing,” the episode has left critics and market observers unsettled by the policy U-turn and its political handling.

Reeves had reversed proposed cuts to Personal Independence Payments, a key component of her fiscal strategy, resulting in a £5 billion budget shortfall. This decision, combined with the partial reversal of winter fuel payment cuts, triggered significant market reactions, with UK gilt yields surging and the pound weakening against the US dollar, reminiscent of past financial instability. The International Monetary Fund had previously urged Reeves to refine her fiscal rules to avoid such short-term cuts, warning of potential market backlash.

Reeves’ silence during the Commons session, coupled with Starmer’s initial reluctance to confirm her position, intensified political tensions. Conservative leader Kemi Badenoch seized the moment, branding Reeves a “human shield” for Starmer’s “incompetence” and questioning her credibility. The Labour Party’s internal rebellion, with 49 MPs voting against the weakened welfare bill, further highlighted the government’s challenges, raising concerns about its economic direction as Reeves faces pressure to address the fiscal gap through potential tax rises in the autumn budget.

See also: UK bonds suffer biggest selloff since October 2022 as worries build over finance minister