Rachel Reeves’s next Budget has already sunk the UK. And she hasn’t even delivered it yet.
Rachel Reeves has blown up the UK economy (Image: Getty)
The Chancellor looked like she had wriggled off the hook in June, when the economy surprised with growth of 0.4%. She grabbed the chance to claim her “Plan for Change” was working, but it was just a blip. Normal service has now been resumed.
Today we got the figure for July and it’s a howler. Gross domestic product didn’t grow at all. It came in flat. Nul. A big fat zero, which neatly reflects Reeves’s own chances of surviving the political storm that’s coming this autumn.
The Office for National Statistics said a 1.3% slump in manufacturing, the sharpest drop since July 2024, wiped out small gains in retail and construction.
ONS official Liz McKeown blamed “broad-based weakness”. That’s civil service code for a total balls-up.
One bad month doesn’t tell the whole story. The economy still grew 0.2% in the three months to July.
But momentum is fading, and things will get worse once Reeves finally drops her Budget bomb.
The global economy won’t ride to her rescue. Growth is slowing across advanced nations, while inflation is proving stubborn. At 3.8%, it remains well above the Bank of England’s 2% target, and is set to hit 4% in September.
So no interest rate cuts to look forward to either.
Reeves won’t find salvation close to home. Quite the reverse. Pensions minister Torsten Bell is “masterminding” the Budget, because nobody trusts Reeves to do it, least of all herself.
Bell has just one idea in his self-regarding noddle: hike taxes. That’s the last thing this economy needs.
As for the supposed experts Starmer has drafted in to oversee her, they’re just establishment figures with the same tired answer: tax more, spend more.
It’ll end in another Treasury fiscal blitz that will suck life out of business, investment, household incomes and the economy.
The left’s obsession with tax hikes is backfiring horribly.
Targeting the inheritances of wealthy foreign non-doms has driven one in four abroad, exactly as predicted, and deterred countless high earners from moving here.
Even a modest hike to capital gains tax last October cut Treasury receipts as owners refused to sell up. Bell hasn’t learned from that. Instead, he’s urging Reeves to push through an even bigger hike.
Big business has had enough. Pharmaceutical giant AstraZeneca, Britain’s largest company, has already scrapped a planned £450million vaccine plant in Liverpool, as Labour dragged its feed.
Now it’s planning to invest a massive £50billion – not over here but in the US. AstraZeneca might even shift its entire listing to the States.
American rival Merck has scrapped a planned £1bn UK expansion, blaming the government. Sir Jim Ratcliffe’s chemicals firm Ineos, one of the country’s biggest private companies, has also stopped investing in Britain thanks to Labour.
Retail bosses at Asda and Marks & Spencer have bluntly said they can’t take more tax pressure. Neither can households, already groaning under Labour’s stealth raids.
But Reeves’s hands are tied. She can’t cut spending because Labour’s left won’t allow it, and even her fellow ministers are refusing to help. She can’t rip up her fiscal rules without spooking bond markets.
So she’ll do the only thing left to her: squeeze taxpayers even harder.
Before the election, Labour activists hailed her as a hero. Today, she’s a zero. Some time soon, she’ll vanish altogether. Leaving someone else to clean up the mess.
