Chancellor Rachel Reeves faced a swift and coordinated backlash Wednesday over a proposal to cap food prices on essentials such as eggs, bread, and milk. Marks & Spencer, the Bank of England, and the Confederation of British Industry all publicly opposed the idea within hours, with one City analyst calling it "mad" and "neo-Soviet."

Andrew Bailey's warning: price caps are "not sustainable"

Bank of England governor Andrew Bailey delivered the most authoritative pushback, telling MPs on the Treasury select committee that artificial price controls cannot work long-term. According to the source, Bailey said: "If you start doing it as a matter of course then effectively you're artificially moving prices relative to costs and that's not a sustainable thing." His testimony undercut the government's economic credibility at a moment when inflation data had actually improved—falling from 3.3 per cent in March to 2.8 per cent in April.

The timing of Bailey's intervention was particularly damaging. The better-than-expected inflation figures should have been a political win for the Labour government, but the price cap proposal overshadowed the news. By positioning himself as the voice of economic orthodoxy, the Bank of England governor signalled that the Treasury's own central bank sees the plan as economically reckless.

M&S chief executive Stuart Machin's "triple whammy" complaint

Marks & Spencer's chief executive Stuart Machin rejected the proposal as "completely preposterous" and called for a different approach entirely. As the source reports, Machin said ministers should instead consider reversing tax and red tape burdens they are imposing on firms, which he argued are the real drivers of rising costs. His statement reframed the debate: rather than capping what retailers charge, the government should reduce what it costs retailers to operate.

Machin cited a "triple whammy" of pressures on business: higher taxes, regulatory burdens imposed by government, and disruption caused by the Iran war. By naming these three sources of cost inflation, he shifted blame away from retailer margins and toward government policy itself—a direct challenge to Reeves's framing of the problem .

The CBI and City analysts pile on

The Confederation of British Industry also opposed the plan, joining M&S and the Bank of England in a rare show of institutional consensus against a government proposal. one unnamed City analyst quoted in the source went further , describing the idea as both "mad" and "neo-Soviet," invoking Cold War-era economic planning to suggest the proposal was not just impractical but ideologically alien to a modern market economy.

The speed and breadth of the backlash suggest the proposal caught even government allies off guard.. According to the source, a treaury minister downplayed the idea in an interview, signalling internal distance from Reeves's position even as the Chancellor was still defending it.

What remains unclear about the proposal's future

The source does not explain how Reeves intends to enforce a price cap, whether the government has modelled the economic effects, or whether the proposal was floated as a trial balloon or a serious policy commitment. it is also unclear whether the backlash will force the government to abandon the idea or merely refine it.. The source reports criticism from major retailers and the Bank of England but does not include any statement from Reeves herself responding to the objections, leaving her current position ambiguous.