Rachel Reeves told to cancel China trip as Britain’s market meltdown could trigger ‘1976 level crisis’

Rachel Reeves faces mounting pressure to cancel her trip to China as Britain grapples with a market crisis that has pushed Government borrowing costs to their highest level since the 2008 financial crash.

The Chancellor is due to fly to Beijing this weekend amid growing alarm over plunging sterling and surging bond yields that threaten to wipe out her fiscal headroom.

The pound tumbled to a nine-month low against the dollar on Wednesday as UK 10-year borrowing costs climbed above 4.8 percent.

Both Conservative and Liberal Democrat MPs have demanded Reeves abandon the long-planned China visit to address the escalating financial turmoil at home.

Reform UK MP Richard Tice warned Parliament: “We are heading towards, be under no illusion, a financial crisis.”

Economists warn the market turmoil could force the Chancellor into emergency tax rises or spending cuts, with her £9.9 billion fiscal headroom at risk of being completely erased. The yield on 30-year gilts surged to 5.36 percent, reaching its highest level since 1998.

The FTSE 250 index dropped by two percent on Wednesday – its steepest one-day decline since last August. Brad Bechtel, global head of foreign exchange at Jefferies, said the UK was seeing a “micro version” of the 2022 bond market meltdown witnessed after Liz Truss’s mini-budget.

“The pound seems to be reacting to gilts more and more and that means we are spilling further and further into fiscal emergency territory,” he warned.

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Shadow Chancellor Mel Stride led fierce criticism of Reeves in the Commons, demanding: “Where is the Chancellor? It is a bitter regret that at this difficult time with these serious issues she herself is nowhere to be seen.”

Former Treasury minister Dame Harriett Baldwin accused Reeves of having “fled to China” rather than explain how she would help the UK’s “flatlining” economy.

Outside the chamber, Liberal Democrat leader Sir Ed Davey said Reeves should cancel her trip to China and make an emergency statement to Parliament.

He said: “Instead of jetting off to China, the Chancellor should urgently come before the House of Commons to cancel her counterproductive jobs tax and set out a real plan for growth.

“The country is paying an ever-higher price for the total mess the Conservative Party made of our economy, and the Chancellor needs to realise that she’ll never dig us out of this hole without a far more ambitious plan to grow our economy, including rebuilding trade with Europe.”

Reform UK’s deputy leader Richard Tice urged the Government to ask Reeves to “return from her ridiculous trip” given that the pound was “almost collapsing.”

The Treasury defended Reeves’ China visit, with Chief Secretary Darren Jones telling MPs he would not ask her to return from the “important” trade mission. A Treasury spokesperson insisted: “No one should be under any doubt that meeting the fiscal rules is non-negotiable and the Government will have an iron grip on the public finances.”

They added that the Chancellor would “leave no stone unturned in her determination to deliver economic growth and fight for working people.”

Jones argued that financial market movements are determined by “a wide range of international and domestic factors” and that recent market shifts have been “largely driven by data and global geopolitical events.”

The Treasury also dismissed speculation about fiscal headroom as “pure speculation”.