Rachel Reeves is preparing to deliver a pointed message to her successor at Number 11 as she defends her two-year record ahead of a leadership transition.
The outgoing Chancellor will use her third Mansion House speech to urge the next government to protect the fiscal credibility she says she has built during her time in office.
The address is widely expected to be her last major act as Chancellor before Andy Burnham is installed as Prime Minister next week following Keir Starmer’s resignation.
Reeves is set to tell City chiefs that “because of the choices I have made, I’m proud to report that the British economy is strong.”
She will add that “this government has made huge strides in delivering on the promise of change,” before warning that stability must be preserved by whoever follows her.
“That change is only possible if we maintain the credibility that we have earned, and the stability that we have built,” Reeves is expected to say.
Reeves had previously signalled her desire to remain Chancellor, telling City leaders last month she had “unfinished business in fiscal devolution,” a phrase seen as a nod to Burnham’s regional empowerment agenda.
Those ambitions faded quickly as the incoming Burnham team declined to rule out a Treasury reshuffle, with Energy Secretary Ed Miliband emerging as the most likely candidate for the role.
Miliband is reportedly poised to approve fresh gas exploration licences in the North Sea, overturning his long-standing opposition to such projects, in what many see as a clear signal he is pursuing the chancellorship.
Burnham has sought to calm investor concerns by pledging to retain Reeves’ fiscal rules, including a commitment to match spending with revenues by 2030.
Reeves’ farewell Mansion House speech comes after a turbulent two years with the business community, which initially welcomed her as a steady, credible steward of the public finances.
Her so-called “smoked salmon offensive,” a series of pre-election meetings with senior City figures, helped restore Labour’s standing with financial leaders ahead of the 2024 general election.
That goodwill eroded sharply after successive budgets brought steep tax rises, minimum wage increases, and tighter employment rules that hit businesses hard across multiple sectors.
The British Chambers of Commerce said in its quarterly economic survey last week that the number of firms planning to increase investment over the next 12 months had fallen to a post-pandemic low, with over half citing taxation as a key concern.
“We are being taxed out of existence,” one business owner said, capturing a sentiment that has grown increasingly common among UK company leaders.
Despite that backdrop, Reeves is expected tonight to praise financial services as “the crown jewel in the UK economy and a shining example of our potential as a nation.”
She will also outline a path toward loosening bank capital rules, a move likely to be welcomed by City institutions eager for regulatory relief.
Dame Susan Langley, Lady Mayor of the City of London, will join Reeves at the event and is set to unveil plans for a new AI platform designed to accelerate investment into British infrastructure projects.
The joint announcement underscores efforts to present a forward-looking vision for the City even as political uncertainty swirls around the future occupant of Number 11 Downing Street.