Rachel Reeves was accused of having “fled to China” rather than explain how she will help the UK’s “flatlining” economy after borrowing costs hit a 27-year high.
Shadow chancellor Mel Stride, joined by his Conservative colleagues, took aim at the Chancellor as he questioned whether she will be forced to increase taxes further or cut public services should her fiscal headroom evaporate.
He claimed Britons are having to “pay the price for yet another socialist government taxing and spending their way into trouble”, adding it is time for Ms Reeves to “change course”.
The Chancellor has a long-planned visit to China scheduled for this week but Mr Stride later said Ms Reeves should “now cancel her travel and focus on this country instead”.
In the House of Commons, Reform UK deputy leader Richard Tice said Ms Reeves should “return from her ridiculous trip” given that the pound is “almost collapsing”.
Tory former Treasury minister Dame Harriett Baldwin added: “Is the reason that the (Government) front bench is so empty today, the Chancellor has fled to China, that she has realised that her Budget means that she now is the arsonist?”
Treasury minister Darren Jones, who was sent by the Government to reply to an urgent question directed at the Chancellor, said the trip is “important” for UK trade and would continue.
The exchanges in the House of Commons came against the backdrop of Government borrowing costs continuing to surge, which has put more pressure on Labour over its fiscal plans.
Mr Stride said: “Where is the Chancellor? It is a bitter regret that at this difficult time with these serious issues she herself is nowhere to be seen.
“In the last 48 hours borrowing costs have reached a 27-year high and it is the Chancellor’s decisions that have led us here.
“Before the election (Ms Reeves) promised that Labour would get debt falling, they would not fiddle the figures, they would not raise taxes and they would grow the economy, but the economy is now flatlining.
“Survey after survey is showing business confidence has simply evaporated and at the Budget the Chancellor hiked up taxes, increased borrowing by an average of £32 billion-a-year across the forecast and conveniently adjusted her fiscal rules to allow her to do it.
“Higher debt and lower growth are understandably now causing real concerns among the public, amongst businesses and in the markets. And despite what (Mr Jones) says about international factors, the premium on our borrowing costs compared to German bonds recently hit its highest level since 1990.
“With these rising costs, regrettably the Government may now be on course to breach their fiscal rules and the Chancellor has committed to no further tax rises, so does (Mr Jones) stand by her commitment not to increase taxes even further and, if so, does this mean that the public should expect cuts to public service spending if the OBR judge her fiscal headroom has evaporated?”
Mr Jones, in his reply, said: “He asks me about the fiscal rules – as I said in my statement just now, they are non-negotiable.
“As the Chancellor set out at the Budget we have two fiscal rules – one that day-to-day spending should be met by tax receipts and the second that debt should be falling as a size of the economy.”
Mr Jones went on to criticise the Tories over their record on borrowing, saying an “absolute failure to get growth into the economy” had meant they “stacked up the country’s credit card”.
The minister earlier also said: “Financial market movements, including changes in Government bond or gilt yields, which represent the Government’s borrowing costs, are determined by a wide range of international and domestic factors.
“It is normal for the price and yields of gilts to vary when there are wider movements in global financial markets, including in response to economic data.
“In recent months, movement in financial markets has been largely driven by data and global geopolitical events, which is to be expected, as markets adjust to new information.”
Conservative peer Philip Hammond, who served as chancellor in Theresa May’s administration, disagreed with Conservative demands for the Chancellor to cancel her trip later on Thursday.
Lord Hammond, who was also previously foreign secretary, told BBC Radio 4’s World at One programme: “I wouldn’t personally recommend the Chancellor to cancel her trip to China.
“I think the trip to China is important and I think this can wait until she gets back next week, but I do think she will need to reassure Parliament about what is going on when she does get back next week.”
The Tory peer nonetheless said that if he were still in Number 11 he would be “worried about the trend of what is happening” now and that a message from the Chancellor was needed to show she understands business concerns.
“I think it’s right that we don’t get obsessed with single-day movements in the markets because there are a lot of short-term drivers in the markets as well, but it’s clear that on a medium-term trajectory the markets are concerned about the sustainability of the fiscal position in the UK and about the robustness of UK economy.”
Outside the chamber, Liberal Democrat leader Sir Ed Davey said Ms Reeves should cancel her trip to China and make an emergency statement to Parliament.
He said: “Instead of jetting off to China, the Chancellor should urgently come before the House of Commons to cancel her counterproductive jobs tax and set out a real plan for growth.
“The country is paying an ever-higher price for the total mess the Conservative Party made of our economy, and the Chancellor needs to realise that she’ll never dig us out of this hole without a far more ambitious plan to grow our economy, including rebuilding trade with Europe.”
Asked why the Chancellor did not respond to the urgent question, the Prime Minister’s official spokesman said: “It’s up to the Treasury who they send to respond to UQs. I think it’s quite common for the chief secretary to respond to urgent questions in the chamber.”
