Rachel Reeves just had biggest shock of life – you won’t believe it | Personal Finance | Finance

In Westminster, Whitehall and the City of London, Reeves is seen as out of her depth. But one corner of the financial world has faith in her. And it turns out to be the most important of all. The bond market.

They believe Reeves is the only figure in Labour capable of stopping Britain’s perilous finances from spiralling out of control. Since becoming chancellor, she’s broadly stuck to her fiscal rules. The aim is to cover day-to-day spending from tax revenues and reduce debt as a share of the economy over five years. Pretty much everybody else in Labour would smash them to pieces to satisfy the hard left.

Remember when Rachel Reeves broke down in tears at PMQs and we thought she was finished? Bond investors went into meltdown and gilt yields soared. Bond investors don’t think she’s much of a chancellor either. Until they look at the gruesome alternatives.

Leadership candidate Andy Burnham terrifies them. They reckon he’ll go on a tax, borrow and spend spree, potentially triggering a run on the pound. When Burnham said Labour must stop being “in hock to the bond market”, he revealed himself to be completely clueless about how government finances work. Gilt yields soared.

The thought of Rayner and Miliband in No 10 also strikes terror into bond investors. Yields on 30-year gilts are already around 5.8%, the highest this century. We can’t afford them to go any higher.

And that’s what’s protecting Reeves. As journalist Dan Hodges tweeted today, MPs now believe leading contenders will have to publicly commit to keeping her as chancellor right at the start of the leadership campaign. It’s the only way to calm bond market nerves and prevent a possible run on the pound.

So whoever wins – Burnham, Streeting, Rayner or Miliband – Reeves looks safe. Probably for the life of this Parliament. What a turnaround.

This completes a magnificent day for the chancellor. This morning, we learned the economy has even grown on her watch. Suddenly, against all the odds, her job looks secure. Reeves will be thrilled at the prospect of another three years in No 11. Express.co.uk readers may take a different view.