ECONOMISTS have spoken out after the BBC broadcast an interview where the Chancellor compared government funds to a household budget - despite the broadcaster's own guidelines.
Rachel Reeves told the BBC during an interview with Nick Robinson on the Political Thinking podcast that her mum “needed to make sure” that everything that she was spending she could afford, as she used the household analogy for government spending.
In a short clip posted to social media by the BBC, Robinson is seen saying the last time she was on the show she said her mum kept every receipt because she wanted to check that “every penny added up”.
"She needed to make sure that everything that she was spending, she could afford" Chancellor Rachel Reeves tells @bbcnickrobinson about childhood memories of her mother's budgeting at home Listen to #PoliticalThinking in full on @BBCSounds 🎧 https://t.co/SS7nlS6qRa pic.twitter.com/LhvoVP4393
— BBC Politics (@BBCPolitics) January 17, 2025
The interview clip has been criticised by economics due to it breaching the broadcaster's own editorial guidelines.
In a review by the BBC of its own economics coverage in November 2022 it outlined that national debt is not like personal debt and that states don’t retire or die and do not pay off their debts entirely.
The review stated that household analogies are “dangerous territory” and that they are “intensely contested” and can “easily mislead” people.
The review read: “States don’t tend to retire or die, or pay off their debts entirely, is one way national debt is not like household or personal debt, not like a credit card for example, and why analogies with household debt, or suggestions the government must ‘pay off’ or ‘pay down’ the debt can cause intense debate.
“Clearly, pithy, accessible metaphors are valuable to journalists and audiences. And ‘paying off’ is a tempting phrase even to those who know the arguments because it seems to express the idea there must be some degree of discipline over debt, even for a state.
It added: “We just used a household analogy by saying mortgage debt equal to 100% of income would not usually induce fear. But again, it helps to know that household analogies are dangerous territory, intensely contested, and can easily mislead.”
One economist James Meadway, who reposted the BBC clip of Reeves's interview, said it was “embarrassing” and that her economic “drivel” was not challenged.
He added a quote that read: “We think too many journalists lack understanding of basic economics”.
Meadway said: “Embarrassing. Reeves has a masters from LSE and so she must know that, even in terms of mainstream economics, this is drivel. Notice it is not challenged.
“But it serves a purpose: it justifies the doom loop. And the doom loop means finance always wins even if the rest of us lose.”
Meanwhile, financial journalist Paul Leiws said that the interview highlighted the “problem” the UK Government is having with the economy as he also pointed out that the state is not like a household budget.
Lewis added: “Economist Rachel Reeves is in danger of making the same mistakes as the previous iron lady!”
Reeves has been under increasing pressure this week due to rising borrowing costs amid sluggish economic growth.
It was reported last week that the UK’s long-term government borrowing costs are at its highest level since 1998.
On Thursday the Bank of England pencilled in no growth again for the fourth quarter, following zero expansion in the previous three months.
Fears are mounting that the economy is heading for a period of so-called stagflation, where there is little or no economic growth combined with persistent inflation.
