No More Tears. U.K. Finance Minister’s Job Appears Safe.

Britain’s Chancellor of the Exchequer Rachel Reeves and Prime Minister Keir Starmer. (Jack Hill—WPA Pool/Getty Images)

No more tears, a stronger pound, and lower borrowing costs. That is where things stand on Thursday, after the British prime minister made it clear that he supports his finance minister.

On Wednesday, the currency sank and prices of gilts fell, sending yields higher, after Prime Minister Keir Starmer appeared not to back Chancellor of the Exchequer Rachel Reeves during Parliament’s weekly debating session, the Prime Minister’s Questions. Reeves wiped away tears, televised images showed.

A Downing Street aide later said Reeves was “going nowhere.” The prime minister said in a television interview that Reeves was doing an excellent job and would remain in her position “into the next election and for many years after.” A spokesperson for Reeves said she had been upset about a “personal matter.”

Investors reacted badly to the idea Reeves’ job could be in jeopardy. The pound fell 1% against the U.S. dollar, ending the day trading at $1.36. U.K. government bonds prices also dropped, sending the yield on 10-year gilts to 4.617% from 4.581%.

Late Thursday in the U.K., the pound was at just under $1.37 and gilts were yielding 4.539%.

Reeves has been Chancellor of the Exchequer since July 2024, when the Labour Party won the most recent U.K. general election by a landslide. She promised to repair investor trust in Britain’s economy, which was dented by former Prime Minister Liz Truss’s 49-day stint in office. In October, she adopted a set of fiscal rules that included a vow to borrow only for investment, rather than to pay day-to-day bills, by the fiscal year ending March 2030.

It has proven tough to keep those pledges while funding much-needed improvements in public services.

Labour promised not to raise taxes on what it called “working people” in its 2024 manifesto, so it had been trying to repair the country’s finances by cutting welfare benefits. But Starmer’s government had to shelve plans to slash disability payments Wednesday after a rebellion by some of the party’s own lawmakers.

Seeing a Treasury chief cry is a rare sight, although Barron’s was able to find at least one other example. In 2011, Canadian Finance Minister Jim Flaherty fought back tears when announcing a review of his government’s disability savings plan, according to multiple reports.

Write to George Glover at george.glover@dowjones.com