‘Rachel Reeves thought she’d got lucky – but today she’ll be blown to bits’

Much of the misery of recent years was caused by rocketing inflation after the war in Ukraine. It was falling when Labour took office, but Reeves drove it back up by piling taxes on businesses and splurging on public sector pay. Even so, the Bank of England predicted inflation would fall to its 2% target as early as next month. That would have been welcome news for borrowers and businesses, opening the door to rate cuts and a rare confidence boost.

Reeves was all ready to claim the credit. She’s repeatedly said recent rate cuts were down to her stewardship. In reality, they’d be way lower without her. UK base rate is 3.75%. In Europe, it’s been 2% for months. Now inflation may suddenly shoot back upwards and those hoped-for cuts could vanish. And for once, that isn’t entirely her fault.

Today Reeves delivers her Spring Statement. She wanted it to be light on drama and heavy on reassurance, which would be a first for her. Donald Trump has put paid to that.

Markets had been pricing in an 80% chance of a rate cut at the Bank of England’s meeting on 19 March. That’s now slipped to 50%. Reeves was banking on cheaper borrowing to spark spending and investment. Fat chance now.

As tensions rise she may also have to ramp up defence spending by £28billion, which will blow a hole in her fiscal plans.

Mujtaba Rahman of consultancy Eurasia Group says the timing is dreadful for a chancellor who thought the economy was on a slightly more even keel. Instead, Labour is “confronting a crisis that’s completely outside its control”.

Of course, this gives Reeves cover. Today she’ll claim credit for anything that’s going right and blame anything that isn’t on events in Iran.

Apparently, she’ll tell us that “because of the decisions we have already taken, we have a stronger and more secure economy. Inflation and interest rates falling. And in every part of Britain, working people are better off.”

Today’s Spring Statement was meant to be quiet and non-controversial. But that strategy has been blown to pieces by Middle Eastern missiles and drones. They say you make your own luck in life. That may explain why Rachel Reeves has so little of it.