A politician crying in parliament may be generally viewed unwise, but there was a spin-off benefit for British chancellor of the exchequer Rachel Reeves from her recent emotional interlude in the House of Commons.
British government bond yields spiked the moment Reeves’s tears were flashed across television screens, a signal that markets feared her potential removal. It could, therefore, be interpreted as a vote of confidence – of sorts – in the chancellor by the financial industry, even if it was rooted more in fear of what might follow her.
After a torrid few weeks, Reeves will take whatever solace she can find. She will look to regain momentum on Tuesday evening, when she gives a big speech to City of London financiers in the Mansion House, home of the lord mayor of the financial district.
British chancellors generally use their annual Mansion House speeches to lay out their approach to financial industry regulation, as well as to flag big fiscal policy adjustments that might of interest to institutional investors and their chief economists.
In her inaugural address last November, Reeves suggested post-crash financial regulation of bankers and insurers had “gone too far” and was stifling growth. She is expected to build on that theme on Tuesday with a promise to slash red tape.
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Reeves is expected to announce a loosening of the “senior manager’s regime” that places greater personal responsibility on the shoulders of financial executives for the ramifications of decisions they make on the job. She is also expected to flag an easing of the regulatory regime for the pre-vetting and approval of senior appointments.
For the investment professionals in the room, there may be crowd-pleasing announcements to boost auto-enrolment in pensions, as well as a campaign to encourage retail investors to buy shares instead of saving cash.
But many will also want answers from Reeves about where she intends to find £6.5 billion (€7.5 billion) of welfare savings she has had to give up, after her plans to cut the winter fuel allowance for pensioners and reduce access to disability payments were killed off by Labour rebels.
Her problem could be that she doesn’t yet know the answer herself.
