It seems odd to recall now but when Labour won the July election, financial markets welcomed the news.
Chancellor Rachel Reeves promised growth only to destroy it (Image: Getty)
They thought Sir Keir Starmer’s clear victory would bring the stability many other countries lacked, especially with Chancellor Rachel Reeves running the economy.
Markets aren’t happy now. Neither are pensioners, farmers, business owners, and taxpayers.
Reeves vowed to ignite growth in a sluggish economy, assuring the nation it was her number one priority.
That pledge turned out to be as reliable as her CV. Or her promise not to increase taxes on working people.
Far from delivering growth, Reeves seems to have abolished it altogether.
She inherited an economy that was finally starting to grow, rising 0.7% in the first quarter and 0.4% in the second.
That was the fastest rate in the G7.
But instead of building on that, she swung her wrecking ball.
Confidence collapsed as Reeves bemoaned the £22 billion black hole she claimed not to notice before the election and threatened massive tax hikes in her Budget, four months down the line.
Her credibility also collapsed when black holes were discovered in her CV.
In the first three months of Labour rule (July, August and September) growth crashed to a mere 0.1%. Updated figures show it didn’t even manage that.
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That figure was revised downwards over Christmas. To a big fat zero.
The economy didn’t grow at all in Labour’s first quarter.
It shrank by 0.1% in both October and November, and December may be worse.
Reeves will slap £40billion of new taxes on businesses from April. Bosses are already shedding jobs and cutting investment as they try to avert the shock.
Instead of flocking to the UK, as Starmer promised, global investors are getting out. FTSE companies are fleeing to the US.
Instead of growth, Reeves risks driving us into recession.
Reeves defends herself by claiming: “You can’t turn round 14 years of poor economic performance in six months.”
Unfortunately, six months is long enough to make it worse.
As the economy shrinks, we’re sliding deeper into trouble.
Our borrowing costs have spiked to the highest level against Germany since 1990, even as Germany plunges into political and economic chaos.
This is costing us billions in extra interest. And remember, Reeves is borrowing another £30billion next year, after fiddling the rules to do so
We saw under Liz Truss what happens when markets lose faith in the UK. We’re getting close to that again.
If we slide into recession, Reeves will have to raise taxes yet again in 2025, the Institute for Fiscal Studies has just warned.
But this will only destroy more growth. We’re heading into a vicious spiral.
Growth is the lifeblood of an advanced society. It’s how we fund everything from the army to the NHS.
Without it, we’re doomed. And Reeves has just abolished it.
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