The Chancellor knows she’s living on borrowed time.
Chancellor Rachel Reeves will leave a bombed-out economy as her legacy (Image: Getty)
Few believe Rachel Reeves will still be in post come the next election. She certainly won’t be in power AFTER voters have had their say. Nor will Keir Starmer. Labour will be swept away on a tidal wave of public fury at their economic mismanagement. Even senior Labour MPs are horrified at their incompetence.
Dame Meg Hillier, chair of the Commons Treasury select committee, slammed recent Budget chaos, saying that it was “akin to throwing several hand grenades onto the pitch”. In practice, Reeves has done a lot worse than that, as Friday’s data confirmed.
Incredibly, the UK economy shrank by 0.1% in October, which follows a similar fall in September and zero growth in August.
As the Budget loomed, consumers stopped spending, the property market stalled and employers held back hiring as they dreaded the coming carnage.
They were right to be terrified. Reeves hit us with another £26billion of tax hikes on top of last year’s £40billion, money she’ll only blow on public sector pay and welfare.
The economy is “imploding”. Inflation is higher than it needs to be, unemployment is climbing and borrowing costs are far higher than in any other major economy. The pound could be set for a “screeching” fall.
Reeves clearly isn’t up to the job. She can’t even complete a simple everyday tasks, like telling the truth.
But there’s also something sinister going on. She’s playing a brutal political game, using the UK economy as bait.
Reeves feels she was dealt a bad hand by the Tories, and wants to make them pay for it. Or Nigel Farage. Either will do.
Her Budget has been derided as “spend first, tax later”, and rightly so. Reeves is front-loading spending by extending the fuel duty freeze and household energy support, and scrapping the two-child benefit cap from next April.
At the same time, she’s delaying the tax rises that will actually pay for it. The £2million “mansion tax” doesn’t kick in until 2028. Pension salary sacrifice reforms will save £4.5billion a year, but not until 2029.
The extended freeze on income tax thresholds won’t bite until 2028/29.
Reeves also claims she’ll cut Civil Service running costs by 15%, but only by “the end of this Parliament”. She’s aiming for a Budget surplus, but not until 2030/31. Notice anything fishy about all these dates?
The next general election must be held no later than August 15, 2029, and could happen well before that. The bulk of her tax hikes and spending cuts won’t hit until afterwards.
Reeves gets the pleasure of spending money today, but the pain of restoring fiscal responsibility will be left to whoever follows her ruinous reign.
So what’s she up to? In my view, this is a brutal revenge attack on whoever wins, whether Nigel Farage’s Reform UK, the Conservatives, or a coalition of the two.
Their first job will to slash spending, at which point the left will scream “austerity”. Reversing Reeves’s tax hikes won’t be easy, thanks to her splurge.
Labour is making sure there’s no money left – just like Gordon Brown’s government famously did.
It’s a cruel, cowardly and vengeful approach, burning everything behind her, and leaving nothing for the next government. Once again, the British people will foot the bill.
