Reeves Rearguard Re-Engages on Truce Hopes; Brent Fall Eases Cost-of-Living Maths
Chancellor Rachel Reeves’s backbench-lobbying push continues. The Friday Brent fall to $94.50 on Iran-truce hopes materially eases the cost-of-living arithmetic the Treasury cost-of-living package is designed to address. One Labour MP close to the chancellor: “The biggest fear for the bond markets and the unions is Ed Miliband.” Friends of Reeves believe there is a world in which she survives the transition to a Burnham premiership precisely because it would reassure the markets. Burnham’s allies have suggested Energy Secretary Ed Miliband as his pick for chancellor; Reeves’s allies counter that Miliband “would not be trusted by the bond markets”.
The Reeves cost-of-living package this week — cancellation of the 5p fuel-duty rise (frozen until 31 December 2026), free bus travel for children over the summer holiday, VAT cuts on summer attractions, removal of import tariffs from 100 food items, and a £120 million ceramics support package — lands into a measurably easier macro backdrop than the brief was drafted for. Inflation has slowed to 2.8% — the lowest level in over a year. The Bank of England is widely expected to keep interest rates on a downward path. The 10-year gilt yield at 5.02% is well off the 5.18% peak Friday week. A signed Iran deal would compound the inflation-easing dynamic and give the Treasury fiscal headroom to absorb the cost-of-living package without breaching the fiscal rules.