’I have to make my own path’: Rachel Reeves on her plans for the economy

Outside a cafe on the outskirts of Reading, Rachel Reeves listens to the concerns of small business owners. 'What has affected us in the last couple of years is our relationship with Europe,’ says one participant to nods from others. 'We’re not trading because it’s not worth it.’

Reeves is sticking to the script of not rejoining the EU (’we’re not going back, that ship has sailed’) but says relations can be improved. The shadow chancellor is here supporting Labor candidate Yuan Yang FT Journalist. It was one of the final stops on his UK campaign tour, from Doncaster and Morecambe to Reading and Chipping Norton.

Reeves spent his time meeting with as many business leaders as possible to convince workers to spend. His team is trying to take something like healthy food on the road. 'There was one day when none of the five of us were there before 4pm, it was a bad day,’ she laughs. She watched an election debate from the gym on the treadmill.

She will need all the energy she can get. Reeves has been tipped to be England’s first female chancellor – though she doesn’t want to take anything for granted. Even now, when we talk, she doesn’t let go of 'if we win’ and 'if we win’. But others are already making preparations: civil servants have discussed whether the urinal in the chancellor’s private Edwardian bathroom should be removed in anticipation of his arrival. Is Reeves okay with peeing? 'Not really,’ she laughs. His approach, he says, is to 'smash glass ceilings and urinals’. In other words: absorb the builders. Time for a bidet.

„Our first step in the economy is bringing back stability,” he says. „That’s what I’m determined to do, and if I win, that won’t change the day after the election. What the financial markets and investors have had to deal with over the past few years — the volatility, the unfunded liabilities — you’re not going to get with me. I will ensure that those amounts always add up and bring back that stability so that businesses can plan for the future with confidence. I think investors love what I hear.

There will be no emergency budget. He wants all of his plans to be evaluated and scored by the Office of Budget Responsibility, so his first budget won’t be until the fall. By then, France may also have a new government, under the 28-year-old leader of the National Rally, Jordan Bardella — a prospect that could buoy French markets. Trump is likely to win in America too.

’Britain is for the first time in a long time looking like a safe haven for investors in an increasingly volatile world,’ says Reeves. If other countries want to go back to more populist answers… but we believe in the UK, and we’ll see what happens, people are going back to a party that puts stability front and centre. We’re honest because inheritance is hard and we can’t do everything we want right away.’ Reeves plans to hold a global investor summit in the first 100 days of a Labor government to underline his credentials.

There’s a lot riding on Summit’s success. Labor has plans for supply-side reform through a shake-up of planning rules, but Reeves is not planning drastic tax cuts to boost the economy. Instead, his strategy is to inspire confidence and persuade business to invest. Rishi Sunak tried to achieve something similar after Lis Truss: he believed that by coming across as a more credible figure, the markets would lower interest rates. He was disappointed, and although markets expected the bank’s base rate to now be on a downward path, mortgage rates have been rising slowly for months.

Market nerves aren’t really about which party is in government, but how much the UK economy will suffer from debt and how much can go wrong if politicians panic. Reeves has promised to act, but even the Institute for Financial Studies has accused Labor (along with the Tories) of a conspiracy of silence on tough spending decisions to welcome a new government.

Around the shadow cabinet table, Reeves already has a reputation for saying no. His Labor critics see him as a straitjacket on a more radical agenda. Expense claims are likely to increase once the party comes to power, but he is sticking to his line in the opposition. His favorite parts of Labour’s manifesto are the gray pages that tell where the money comes from.

Being a principal can be a lonely job. Did he get a lot of advice from previous incumbents? 'I’m always happy to get advice,’ she says. He confirms that George Osborne has given it to him. 'Alistair Darling was a good friend and mentor to me. He passed away last year, but I consulted him. Ultimately, the challenges I face if I am Chancellor are different from those faced by George Osborne 14 years ago and different from those faced by Gordon 27 years ago. I have to make my own way.’

He is keen to build connections with his US counterpart, Janet Yellen. When Joe Biden appointed Yellen four years ago, she became the first woman to head the US Treasury. The mood changed when inflation increased. Under much criticism, Yellen admitted that she had made mistakes in the way the economy was headed. If Reaves is at No. 11 this time next week, he can expect the same level of scrutiny in due course.