For a Labor chancellor it was a bold move: Rachel Reeves went to Davos and told an audience of global plutocrats that she wanted to make their lives easier by creating a dangerous regulatory environment for UK consumers.

Far from the Swiss Alps, Reeves’ offensive against regulators cheered by the Conservatives on the right, but some Labor MPs despair that their chancellor’s quest for growth is taking the party into dangerous territory.

“People are holding their heads in disbelief,” said one senior Labor MP.

Reevesspeaking at the World Economic Forum, firmly: “You have to have the right balance. I think the balance has shifted too much towards regulating risk. You need to protect consumers but people need to be able to take risks as well. “

Marcus Bokkerink, chair of the Competition and Markets Authority, on Tuesday became the highest profile casualty of Reeves’ new approach, as ministers forced him out of his job because of his allegedly lukewarm appetite for growth-oriented reforms.

His removal was intended to serve as a warning to other regulators, according to government officials. This month, Reeves asked 17 guardians to come up with action plans to promote growth and warned them he would be wary.

John McDonnell, former Labor shadow chancellor, said Reeves could hand a propaganda victory to Nigel Farage, leader of the populist Reform UK party, if he aggressively pursues his agenda at the expense of consumers.

“I am increasingly concerned that all this will give our opponents, especially Reform, the opportunity to portray the Labor Party as defending corporate abuse and profits,” he said.

Reeves’ efforts to protect business from what government circles see as a pernicious “compensation culture” have taken many forms in recent months, with one common theme: less money for alleged offending consumers.

This week, Reeves sought to intervene in a Supreme Court case to protect banks and other car loan providers from multibillion-pound payouts in a landmark mis-selling case, arguing it would “damage the UK’s reputation as a place to do business”.

Last year, the Treasury successfully put pressure on the regulators slashed a proposed cap on compensation for victims of payment fraud from £415,000 to £85,000, amid fears the new regime could seriously harm some fintech companies.

Reeves also pushed for a review of the Financial Ombudsman Service to prevent more consumer compensation incidents, such as the £50bn paid to banks over the payment protection insurance scandal.

The Conservatives found themselves in a strange position, prompting Reeves to continue an agenda that began in 2023 under Rishi Sunak, when regulators were given a “second objective ” to promote economic growth and competitiveness.

Andrew Griffith, shadow business secretary, wants to see a wider clearout of regulators and is a critic of the Financial Conduct Authority, the City watchdog. He thinks that removing Bokkerink is “a strange place to start”.

Bim Afolami, former Tory City minister, said: “The chancellor did the right thing with the regulators. My advice to him is to keep going. ” Another former Tory Treasury minister said simply: “I think he’s probably right.”

But Conservatives also believe that Reeves, who has presided over a stagnant economy, is using regulators as a scapegoat. Harriett Baldwin, a senior Tory, said the chancellor should “acknowledge some of his own mistakes instead of blaming everyone else”.

As Sir Keir Starmer’s government is in the process of introducing a wave of employment regulation, many business leaders agree with Tory criticism that deregulation should start closer to Number 10. Ministers can still water is low that package.

Regulators said that in return for focusing on growth, Reeves has given a clear signal that he will stand up to regulators if things go wrong – as they inevitably do. “We feel like he’s got our back,” said one.

Nikhil Rathi, chief executive of the FCA, told the House of Lords on Wednesday that proposed rule changes – such as easing mortgage lending controls – could lead to more defaults. “One or two things could go wrong here,” he said, arguing that parliament should give the watchdog a “measure of tolerable failure”.

Consumer groups have expressed alarm. “The combination of anti-regulation rhetoric – and now the firing of the CMA chair – has signaled to consumers that the government is ready to remove the protections built for them,” said James Daley, head of the Fairer research group. Finance.

Rocio Concha, a director of consumer group Which?, said the government was “absolutely right” to focus on growth and the role of regulators. But he added: “Strong consumer protection is not a barrier to growth. They are essential for economic development because they help create a level playing field for dynamic competition, while ensuring that consumers will be protected from destruction.”

Professor John Thanassoulis of Warwick Business School, who is also an independent member of the CMA panel, said the government should “resist the temptation to beat the CMA“.

He added: “It will not drive productivity growth in the entire market. Instead, it will reward a few well-connected companies that will harm the countless, but silent, majority who want a market that is not expensive, which fair, and whose companies put consumers first.

Dame Meg Hillier, Labor chair of the Commons finance committee, said that while she supported Reeves’ intention to push regulators to promote growth, it was “critical that the stability of the economy and the protections for consumers will not be put at risk”.

So far, most Labor MPs have not moved against Reeves. “There is little grumbling about not going back to 2008,” said one Labor grandee, referring to the “light touch” regulatory landscape before the financial crisis. “But it’s not yet in the mainstream of the party – it’s still seen as a bit of a niche.”