British Prime Minister Keir Starmer says Chancellor of the Exchequer Rachel Reeves will remain chancellor "for a very long time to come" after she was seen crying during prime minister's questions.

"I'm not going to intrude on her privacy by talking to you," Starmer told BBC's Political Thinking with Nick Robinson in an interview scheduled to air on Friday, of which BBC's Radio 4 played an excerpt.

When asked by Robinson whether Reeves would still be chancellor by the time the interview airs, Starmer responded: "She'll be chancellor by the time this is broadcast, she'll be chancellor for a very long time to come."

Reeves looked exhausted and appeared to brush away tears during the half-hour session of Prime Minister's Questions in the House of Commons. Her spokesperson said it was a personal matter.

British borrowing costs rose and the pound fell as the weekly question-and-answer session unfolded on TV, with market analysts saying the moves reflected fears that Reeves would be replaced, throwing the government into further turmoil.

Asked about Reeves, a Treasury spokesperson said:

"It's a personal matter, which – as you would expect – we are not going to get into."

Starmer's press secretary told reporters: "The chancellor is going nowhere, she has the prime minister's full backing."

The pressure on Reeves comes after the government managed to pass its welfare reform bill, but only after it removed measures that would have led to savings in the long run.

Reeves has repeatedly emphasised her commitment to self-imposed fiscal rules, limiting the amount Britain will borrow to try to build the confidence of investors.

But that ambition collided with Labour members of parliament who were opposed to the scale of the cuts to welfare, and who said Reeves was being cruel in pushing for billions of pounds of savings from some of the most vulnerable people in society.

Opposition politicians and economists said the decision to sharply scale back the welfare reforms meant the government would have to raise taxes or cut spending elsewhere to balance the public finances in the annual budget later this year.

Looking miserable 

One Labour member of parliament, who asked not to be named, said Reeves was upset after an argument with the House of Commons speaker Lindsay Hoyle. A spokesperson for Hoyle declined to comment.

The opposition Conservative Party leader Kemi Badenoch singled out Reeves during the weekly set-piece parliamentary session, in which MPs put questions to the prime minister in often-raucous exchanges, saying: 

"She's pointing at me, she looks absolutely miserable."

Reeves animatedly gestured back.

Badenoch said: "She is a human shield for his incompetence. In January, he said that she would be in post until the next election. Will she really?"

Starmer then responded that Badenoch would not be in her job by then, but did not explicitly back Reeves.

The appearance of Reeves in tears put British government bonds on track for their biggest daily selloff since October 10, 2022, when financial markets were still reeling from former Prime Minister Liz Truss's decision to announce big, unfunded tax cuts. The pound fell almost 1 per cent. 

Starmer's press secretary later said the prime minister had expressed his confidence in Reeves many times and did not need to repeat it every time a political opponent speculated on her position.

The Treasury spokesperson said Reeves would be working out of Downing Street for the afternoon.

Asked if Reeves had offered her resignation, Starmer's press secretary said: "no".

Long-dated UK bonds rebound partially after Reeves shock

Long-dated British government bonds on Thursday clawed back some of the heavy losses spurred a day earlier by uncertainty over Reeves' future, but they remained noticeably weaker than levels seen earlier this week.

The 20-year gilt yield, which moves inversely to the price, sank 8 basis points on the day in early trade, with similar-sized moves for other gilts across the range of maturities. British bonds outperformed other major markets on Thursday.

Gilts yields spiked on Wednesday by the most since October 2022 – during the ill-fated premiership of Liz Truss – after Reeves' tearful appearance in parliament sparked new anxiety about the management of Britain's public finances.

"Some worries remain about the government being backed into a corner and losing its grip on the public finances," said Susannah Streeter, head of money and markets at broker Hargreaves Lansdown.

"Investors may still be on alert to fresh opposition to government plans to trim spending, to try and abide by its fiscal rules and keep bond markets onside."