Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Chancellor heads to China in search of growth amid surging borrowing costs

by January 11, 2025
January 11, 2025
Chancellor heads to China in search of growth amid surging borrowing costs

Britain has “no choice at all” but to engage with China, Rachel Reeves has argued, as she seeks to shore up economic growth against a backdrop of soaring borrowing costs and uneasy financial markets.

The chancellor arrived in Beijing to finalise new trade and investment commitments worth £600 million over five years, the first trip by a UK chancellor to China in over half a decade.

Her visit comes as the UK grapples with stubbornly high inflation and renewed doubts over how quickly the Bank of England can cut interest rates. The yield on 30-year government debt remains at a 27-year high, while the pound has lost ground against the dollar — both unwelcome echoes of last year’s market turmoil.

Reeves reaffirmed her “non-negotiable” fiscal rules, emphasising that economic stability is vital to restoring confidence. The Treasury’s upcoming spending review is already expected to demand efficiency savings of at least 5 per cent across Whitehall, and the spike in debt-servicing costs could see that figure rise further. Reeves has vowed not to repeat the tax hikes of last autumn, though her options have narrowed as inflationary pressures remain persistent.

Paul Johnson, director of the Institute for Fiscal Studies, warned that any breach of the chancellor’s self-imposed borrowing limits would rattle the markets and send yields higher still. That scenario looms larger with the cost of servicing the government’s debt surging and subdued economic growth undermining tax receipts.

To help counter these pressures, the chancellor aims to increase trade and inward investment ties with China. She argues that the UK’s former, more isolationist stance put the country at a disadvantage when France and Germany were expanding their own commercial relationships with Beijing. China is the world’s second-largest economy and the UK’s fourth-largest trading partner, supporting nearly half a million British jobs through exports.

Agreements reached with Vice Premier He Lifeng include further cooperation in areas such as financial services, cross-border investment, climate initiatives, and agriculture. “Choosing not to engage with China is therefore no choice at all,” Reeves said, insisting that relations should remain “respectful and consistent” despite sharp ideological differences.

Investors have become warier of UK assets in recent weeks, spooked by inflation lingering stubbornly above the Bank of England’s 2 per cent target. Markets had anticipated two quarter-point rate cuts this year, trimming the Bank’s key interest rate from 4.75 per cent down to 4.25 per cent. Analysts now question whether the second cut will materialise, a setback for the 1.8 million households on fixed-rate mortgages due to expire in 2025.

That doubt spells trouble for borrowers hoping two-year fixed mortgage rates would drop beneath 4 per cent. Economists at Pantheon Macroeconomics predict that high inflation could persist, lifting price expectations and dampening the Bank’s appetite for monetary easing. But others, including George Buckley of Nomura, believe rising gilt yields themselves will act as a brake on inflation, allowing more cuts over the coming year.

Beyond the UK, uncertainty hangs over the global economy as Donald Trump’s White House transition adds volatility to currency markets. The dollar has benefited from his pledges on corporate tax reform and deregulation, reinforcing a strong greenback at the pound’s expense. Mortgage brokers say any softening in expectations for British rate cuts will prolong elevated mortgage costs, weighing on the housing market and consumer spending.

For the chancellor, the challenge now is to leverage new trade deals abroad without jeopardising her hard line on fiscal discipline at home. With the Treasury acknowledging that further public spending cuts may be inevitable if debt servicing costs keep climbing, Reeves’s mission in Beijing underlines her broader economic strategy: to stabilise markets, foster growth, and forge alliances — even in politically delicate terrain — to keep Britain on a sustainable path.

Read more:
Chancellor heads to China in search of growth amid surging borrowing costs

0
FacebookTwitterGoogle +Pinterest
previous post
Trump fills latest Cabinet spots as Jan. 20 inauguration nears
next post
Market Pullbacks Provide Opportunities to Build your WatchList – Here’s How

You may also like

Pioneering wind-powered cargo ship sets sail

August 21, 2023

Fleek secures $20.4M to bring global wholesale second-hand...

November 12, 2024

IWG adds over 600 new partnership locations as...

October 10, 2023

Over One-Third of Women Believe They Receive Unequal...

September 18, 2024

Will Shu set for £172m payday as Deliveroo...

April 28, 2025

UK Unemployment Hits 12-Month High as Job Vacancies...

May 14, 2024

Regional disparities can be tackled by more devolution...

September 25, 2023

The Catalyst’s Timing: Identifying Key Market Triggers for...

April 15, 2024

How to Choose a Website Design Company for...

November 6, 2023

Elon Musk suggests social media platform X could...

September 19, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • NDAs banning harassment and discrimination disclosures to be void under new UK workplace reforms

      August 7, 2025
    • Bank of England cuts interest rates to 4% in historic two-round vote amid economic slowdown

      August 7, 2025
    • Trump-Putin meeting agreed upon ‘in principle,’ Kremlin aide indicates

      August 7, 2025
    • Why Transparency and Trust Are Crucial for UK FX Brokers in 2025

      August 7, 2025
    • Smarter Condo Communities Start with Better Finances and Better Software

      August 7, 2025
    • 3 Smart Ways UK Entrepreneurs Can Diversify Their Income

      August 7, 2025

    Categories

    • Business (8,703)
    • Investing (2,179)
    • Politics (16,330)
    • Stocks (3,228)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved