Reeves had a good day, but she’s hardly in the clear

Rachel Reeves’ Treasury team and the No. 10 communications staff should enjoy a drink tonight. The Spring Statement is a success, at least in the terms that matter most to the Chancellor.

That statement is probably most important for what it tells us about Reeves’ priorities. She’s more worried about the gilt markets than about Labour backbenchers.

That’s sensible, but also quite revealing about the condition of Britain in the 2020s. Britannia, which once ruled the waves, is now ruled by the markets.

Reeves had to cut spending to do two things: maintain the projected gap between spending and revenue (the ‘fiscal headroom’), and meet her own fiscal rules, thus demonstrating to bond markets the government’s fiscal discipline.

In that, she succeeded. Forecast gilt issuance is down a bit and the markets are calm. That’s also a testament to a well-executed communications strategy around the statement.