Mark Carney endorses Labour’s shadow chancellor Rachel Reeves

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Mark Carney, the former Bank of England governor, on Monday made a dramatic intervention in British politics as he endorsed Labour’s Rachel Reeves to be Britain’s next chancellor.

Carney, appointed BoE governor by former Conservative chancellor George Osborne in 2013, gave the endorsement in a pre-recorded video message played at the Labour party conference on Monday.

“Rachel Reeves is a serious economist,” said Carney, BoE governor until 2020. “She began her career at the Bank of England, so she understands the big picture.

“But, crucially she understands the economics of work, of place and family. And, look, it is beyond time we put her energy and ideas into action,” he added.

The endorsement was a boost to Labour’s efforts to present itself as a responsible government-in-waiting in the run-up to next year’s expected general election, where the party will seek to return to power for the first time since 2010.

Carney’s message was shown on big screens after Reeves promised in her speech to the conference in Liverpool to put “iron clad” fiscal discipline at the heart of a future Labour government’s economic policy.

Reeves, who said she hoped to become the first woman to hold the 800-year-old post of UK chancellor, declared: “You cannot tax and spend your way to economic growth.”

Carney met Sir Keir Starmer, the Labour leader, at a centre-left conference in Montreal last month and discussed the party’s economic policies.

A spokesman for Reeves said Carney had “no formal advisory role” but confirmed that she spoke regularly to the former BoE governor as well as former chancellors.

Mark Carney speaking by video link to the conference © Charlie Bibby/FT

Reeves told the conference she would target growth through supply-side reforms, including changes to the planning system to speed up infrastructure projects.

She said a Labour government would be active in the economy as part of a programme she called “securonomics”, including partnering with the private sector to promote new industries.

“There’s a role for government in encouraging and de-risking investment in new industries,” she said.

Reeves added that a publicly owned “Great British Energy” would take part in a competitive process to “rewire” the country, through improved grid connections.

The shadow chancellor’s speech repeated a number of previously announced tax rises targeted at private schools, non-doms and energy companies. Technology companies will also be targeted as part of a shake up of business rates.

But the overall message of Reeves’ speech was that Labour would have to be “disciplined” and recognise the very tight fiscal situation an incoming Starmer government would face.

Labour activists applauded Reeves’ comments about fiscal discipline, to the delight of her advisers, and even her promise that the Office for Budget Responsibility would have new powers to scrutinise significant new tax and spending policies.

Reeves has become a subject of significant interest to the party and business lobbyists as the next general election gets closer. The conference hall in Liverpool was filled for her speech, with people turned away at the entrance.

There were scant new policies in her speech, although she promised to curb the use of private jets by ministers and halve the use of consultancy firms in Whitehall over the course of the next parliament.

Labour is hoping voters will embrace Reeves’ idea of “securonomics”, which she said would be “built from the bottom up and the middle out” and would provide stability after years of economic turmoil.

“The biggest risk to the British economy is five more years of the Conservative party,” she said.

Reeves said Labour would put the economy at the heart of the next election campaign, asking: “Is there anything in Britain that works better than it did when the Conservatives came to power?”

Jeremy Hunt, the Conservative chancellor, said it was “extraordinary that inflation wasn’t mentioned once by Rachel Reeves when it is the biggest challenge facing the British economy”.