Sir Keir Starmer has refused to guarantee Rachel Reeves’s long-term future as chancellor amid ongoing market turmoil, as she’s urged to convene an emergency meeting with the banks. The prime minister has been giving a speech about AI, saying the tech could help turn the economy around.
Monday 13 January 2025 12:51, UK
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Our political editor Beth Rigby was among the journalists who asked the prime minister a question after his speech about AI.
She asked about the potential for spending cuts amid the economic challenges the government’s facing (read more here).
Speaking after, Beth says the speech was clearly “overshadowed” by the market turmoil – with the cost of government borrowing having hit its highest level since the financial crisis.
Growth is flatlining, she adds, and with a commitment not to raise taxes for the time being, the prime minister was eventually clear that he’s “prepared to be ruthless” if cuts are needed to balance the books.
The next few months will be crucial, says Beth, ahead of the next major independent economic forecast for the UK.
In the meantime, the tough questions continue – including whether the chancellor will even keep her job.
Sir Keir Starmer says he has “full confidence” in her, but didn’t guarantee she’d still be in post for the next election.
“That he’s even being asked that question tells you a bit about the nervousness in the markets,” says Beth.
Ongoing turmoil in the markets meant the prime minister’s Q&A with journalists after his speech on artificial intelligence veered more towards the economy than perhaps he might have liked.
As markets opened this morning, the pound headed towards the $1.21 mark, the lowest level since November 2023.
UK borrowing costs are also up, along with the oil price, and there are now fears mortgage rates could spike.
‘Many will be worried’
The Lib Dems are urging the chancellor to hold an emergency summit with lenders to reassure mortgage holders.
The party’s Treasury spokesperson, Daisy Cooper MP, said the October budget “has not worked” and “many will be worried”.
“Rachel Reeves can no longer sit on her hands as this turmoil threatens to have real consequences for millions of homeowners,” she added.
Sir Keir Starmer insisted he had “full confidence” in his chancellor earlier, but didn’t guarantee she’d still be in post by the time of the next election.
Next, Sir Keir Starmer is asked whether Rachel Reeves will still be chancellor at the next general election.
The prime minister doesn’t explicitly answer.
Instead, he says the UK’s fiscal rules are “absolutely central to what we do”.
“The changes we’re bringing about… all of these are designed to ensure that we get the growth that we need.
“That is why I am confident in our plan for growth.”
Sir Keir adds he is “confident in our team”.
“We never pretended… that after 14 years of failure you can turn around our economy and our public services before Christmas.”
However, he says Labour have the determination to do this in time.
‘Full confidence’ in chancellor
Asked again if Ms Reeves will be his chancellor for the duration of this parliament, Sir Keir says she has his “full confidence”.
“She has the full confidence of the entire party,” he adds.
“She was given an incredibly challenging task at the budget because not only was the economy broken, but we had a £20bn black hole.”
Sir Keir says his chancellor “took the tough decisions” and she was “right” to do so.
He again refuses to guarantee he’ll keep her in post, though.
Sky’s political editor Beth Rigby now asks Sir Keir Starmer if he will have to implement spending cuts given the market turmoil.
He avoids answering the question directly.
He says economic growth is “the number one mission of this government”, and that there was flat growth under 14 years of the Conservatives.
He lists changes to the planning regime and the move towards green energy as part of his plans to grow the economy, as well as measures in last year’s budget and making more use of AI.
He says AI will “change things quicker than we think”, with improvements possible within three to five years rather than 10.
Sir Keir Starmer is now taking questions from the media, which begin on the matter of the economy.
The prime minister is asked about AI’s impact on growth, but also whether there will be further spending cuts as the “government looks to be in a hole” financially.
He says: “We have to look at this through the lens of opportunity.
“When it comes to jobs, the question isn’t the loss of jobs, it’s the changing jobs.”
Sir Keir says a doctor might be able to spend more time with patients, and less on paperwork.
This would allow people to spend more time on the “human aspect” of their work, he adds.
Starmer: AI will help turn economy around
Turning to the economy, Sir Keir reiterates that Labour has inherited a “real mess” and has to “turn it around”.
“AI will help us with that,” he says.
“I would argue that we would do it in any event… but it’s doubly necessary because of the mess of the last government.”
The prime minister does not rule out spending cuts.
During his speech on AI, Sir Keir Starmer says the technology can help improve public services.
He says AI “isn’t something locked away” behind the walls of companies – it can help every day people.
That includes helping teachers plan lessons, reduce NHS waiting lists, speed up planning applications… and even spot potholes.
He also says it will halve the time social workers spend on paper work, help spot tax avoidance, and reduce job centre form filling.
Continuing his speech, Sir Keir Starmer insists the UK will be “one of the world’s AI superpowers”.
But “that’s not boosterism or wishful thinking – this can be done, and it will be done”, he says.
The prime minister adds there is a reason awrtificial intelligence firms and developers are choosing London as their international office.
He says, with Wayve, London has the capacity to build the technology “powering a new generation of self-driving vehicles”.
The UK is number one in Europe for AI investment, Sir Keir adds.
“I’m determined the UK becomes the best place to start and scale an AI business – that will be the centrepiece of our industrial strategy.”
Sir Keir Starmer is on his feet at UCL, where he is addressing industry leaders and journalists about the future of artificial intelligence in the UK.
Kicking off his speech, the prime minister describes how AI was used to locate a blood clot in a woman who had suffered a stroke.
“It’s always a race against the clock,” he says. “Too slow, and the patient may die – and every second of delay increases the risk of paralysis.”
But in this case, he says, the “whole procedure took less than three minutes” and it “saved her life”.
Sir Keir says this is the “power of AI in action” – it will “radically improve public services”, and “transform the lives of working people”.
‘We shouldn’t just focus on safety’
The PM says he understands concerns about the scale of change AI could bring and praises the last government’s decision to set up a “world leading safety institute”.
Sir Keir says “we will build on that” and the UK will lead the world’s first AI safety test later this year.
But he adds: “We will make sure that this technology is safe. But I don’t think that’s the limit of what the state should do.
“We shouldn’t just focus on safety and leave the rest for the market.
“Government has a responsibility to make it work for working people.”
In lieu of a preview from one of our correspondents, we asked AI itself to look ahead to the prime minister’s speech.
ChatGPT says we should expect Sir Keir Starmer to speak of a “new technological revolution that promises to transform every aspects of our lives – from the way we work and learn, to how we interact with each other and the world around us”.
He’ll want his government to ensure AI is “harnessed for the benefit of all people”, driving “economic growth”, helping “improve public services”, and tackling challenges like climate change.
“But, crucially, we will do so with a clear commitment to ethics, fairness, and accountability”.
Looks pretty on point to us – let’s see how it fares. He’s due to start in the next few minutes.
Sir Keir Starmer is delivering a speech on his plans for artificial intelligence, and his aim to “mainline AI into the veins” of the UK.
The prime minister is set to promise investment, jobs, and economic growth due to a boom in the sector.
Sir Keir believes that, if AI is “fully embraced”, it could bring £47bn to the economy every year.
We’ll bring you updates as it happens – or you can watch in the stream below:
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