Rachel Reeves is accused of ‘living under a rock’ as economic growth slows to just 0.3%
Rachel Reeves was accused of ‘living under a rock’ Thursday as economic growth dwindled following her tax raid on businesses.
Output grew only 0.3 per cent between April and June – a sharp slowdown on the previous three-month period when the economy expanded by 0.7 per cent.
The Chancellor boasted that the Office for National Statistics data was ‘a strong start to the year’.
But economists and business leaders warned that the expansion was driven by Government spending, while households tightened their belts and corporate investment nosedived.
And it came after the World Bank found that Britain’s living standards had fallen behind debt-laden Italy‘s for the first time since 2001.
Official data also revealed that productivity – a measure of output per hour worked – has fallen 0.8 per cent since Labour came to power.
That could pose a major challenge to Ms Reeves if it prompts the Office for Budget Responsibility – the UK’s fiscal watchdog – to downgrade its forecasts, which would blow an even bigger black hole in the public finances.
Rachel Reeves was accused of ‘living under a rock’ Thursday as economic growth dwindled following her tax raid on businesses
The Chancellor boasted that the Office for National Statistics data was ‘a strong start to the year’
She is already preparing to raise taxes in the October Budget as she scrambles to fill a £50billion shortfall.
In a further blow to Labour, UK exports to the US have fallen £2billion to a three-year low, despite Sir Keir Starmer’s boast that he was the first leader to secure a trade deal with Donald Trump.
And the Government is still struggling to hit its target of making Britain the fastest-growing G7 economy.
Shadow chancellor Mel Stride said the UK was going through a ‘summer of uncertainty towards the Budget where inevitably taxes will be heightened still further, still damaging our economy’.
‘The Chancellor is living under a rock,’ Mr Stride said.
‘On Rachel Reeves’s watch inflation is up, taxes are up, borrowing is up, growth has stagnated and more tax rises loom. Rachel Reeves is taxing your family’s future to fund her failure.’
Stuart Morrison of the British Chambers of Commerce said: ‘The numbers mask the underlying pain being felt by businesses across the UK.
In a further blow to Labour, UK exports to the US have fallen £2billion to a three-year low, despite Sir Keir Starmer’s boast that he was the first leader to secure a trade deal with Donald Trump
Tax burdens at home, alongside uncertain global trading conditions, created a very challenging environment for the UK’s small and medium enterprises.’
He added: ‘There must be no more business taxes in the autumn Budget.’
Tina McKenzie of the Federation of Small Businesses, said: ‘These figures will be no comfort to small firms.’
Government borrowing jumped to a five-year high of £20.7billion in June while unemployment has risen by more than 200,000 in Labour’s first year of government, taking the jobless total to 1.67million.
The downturn has been blamed on Ms Reeves’ £25billion raid on employer national insurance, a sharp rise in the minimum wage, and plans to impose new workers’ rights.
The Bank of England predicts inflation will reach 4 per cent next month, dashing hopes of a September rate cut.
Ms Reeves insisted the growth figures were ‘positive with a strong start to the year and continued growth in the second quarter’.
But she admitted that the ‘economy has got stuck’.
