The world is sitting on a powder keg. So is Rachel Reeves.
Storm warning: Rachel Reeves will need more of an umbrella is the crisis strikes (Image: Getty)
Soon it could blow up in all our faces. Everywhere you look, the financial system is flashing red. The world’s top financiers are meeting in Washington in a state of near panic, muttering darkly about a looming crisis. I’ve not heard this level of fear since before Lehman Brothers collapsed, triggering the financial crash in 2008.
The threats are piling up. Global debt is at a post-war high. Donald Trump’s latest tariff threats will hammter global trade. China has banned exports of rare earth metals, vital for Western industry and defence.
US tech ‘hyperscalers’ like Meta, Microsoft and Amazon are pouring hundreds of billions into artificial intelligence (AI), a colossal bet that could backfire. Cracks are appearing in America’s $4.5trillion (£3.3trillion) shadow lending market, where unregulated firms have gone bust owing billions.
Markets are jittery, terrified investors are hoarding gold, and the International Monetary Fund warns the US, UK and others are “being complacent as the ground shifts” beneath their feet. The world’s top banker warns this could end in chaos and a shooting war.
The last time the world looked this precarious, we had the financial firepower to fight back. Now we don’t. When the banks crashed in 2008, UK debt stood at just 40% of GDP. Today it’s 100%. And there’s another problem. Today, we also have Rachel Reeves.
Britain’s finances are in a far weaker state than most of our peers. Public debt has hit £2.9trillion, with another £150billion to be borrowed this year followed £100billion every year for the next decade.
Reeves inherited much of this, then made it worse at speed. Her disastrous Budget hike to employer’s national insurance has strangled growth and killed hundreds of thousands of jobs.
The UK economy is set to grow just 0.4% this year and 0.5% in 2026, the slowest in the G7.
The IMF and others repeatedly warn that the size of the British state is unsustainable, with government spending stuck at 45% of GDP.
We now spend £105billion a year on debt interest alone. Foreign investors hold around a third of that debt, and they’re demanding a premium. The result? Britain now pays more to borrow than any other major developed nation. It’s a shocking indictment.
Ten-year gilt yields stand at 4.53% today, far higher than stricken France at 3.36%, and way above fiscally sound Germany at 2.57%. We’re considered a riskier bet than Portugal, Italy, Ireland, Greece and Spain, and only marginally better than Indonesia.
We also face the highest inflation in the West. Reeves has lost control. And she’s put Britain on the frontline of the coming storm.
Two decades ago, Britain was one of the safest bets in the world. Today, we’re sinking fast, weighed down by debt, stagnant growth and political drift. Rather than face up to the threat, Reeves prefers to play petty politics by blaming it on Nigel Farage.
Markets no longer trust us. Reeves can’t afford to slip when she delivers her Budget on November 26. Yet she’s boxed in by the Left, which demands more tax and more spending, on repeat. Pensioners and homeowners will pay the price on Budget day.
And this is BEFORE the global crisis strikes. Afterwards, it could be hellish. We’re facing a global financial shock in the weakest position in decades.
I pray I’m wrong. That the doom-mongers are overstating it. It wouldn’t be the first time. But if they’re right, the reckoning will be brutal. Thanks to Rachel Reeves, Britain could take the biggest hit.
