Labour declares war on UK economy we now face 2025 recession | Personal Finance | Finance
The obvious answer is yes, Liz Truss was even worse. But Truss was gone in 49 days while it looks like we’re stuck with Labour all the way to 2029.
I’m not sure we can stand another five days of this, let alone five years. Just about everything Starmer and chancellor Rachel Reeves have done since winning the election on July 5 has backfired at speed. Just wait until Energy Secretary Ed Miliband gets going.
Within days of taking power, Starmer and Reeves sunk the tentative UK recovery, by talking down the economy and talking up the £22billion “black hole” they claim to have found in the nation’s accounts. Which suddenly became £40billion.
The UK’s lords of chaos triggered widespread panic by threatening a barrage of tax hikes and spending cuts in the Autumn Budget on October 30.
Businesses ceased investing and hiring. Consumers stopped spending. Landlords raced to sell buy-to-lets while wealthy foreign entrepreneurs booked their flights.
The result? Starmer had promised a “laser-like focus” on getting the economy growing but instead zapped it dead almost instantly.
In the first three months on Labour’s watch, from July 1 to September 30, GDP grew by a meagre 0.1%.
That was down from a brisk 0.7% in the first quarter and 0.5% in the second.
Labour instantly turned the UK from the top performing country in the G7 to the second worst. In just three months.
The economy actually shrank by 0.1% in September. If it continues to shrink in the final quarter, we’re on course for a technical recession in 2025.
All this is down to what Labour did before the Budget. Afterwards, all hell broke loose.
Reeves unleashed a brutal £40billion tax blitz. This included a £25billion raid on businesses, by hiking employers’ National Insurance (NI) bills.
On Monday, 80 of the UK’s biggest businesses defied Treasury threats and penned an open letter to Reeves warning job losses were “inevitable” due to the sheer scale of the NI hike.
Deutsche Bank has even put a figure on how many will lose their jobs as a direct result: 100,000.
During the election, Reeves promised she wouldn’t increase NI on “working people”, but working people will ultimately foot the bill, as employers pass on the cost by cutting wages and hiking prices.
As if that wasn’t enough, Reeves used the Budget to borrow an extra £30billion, which she justified by fiddling the fiscal rules. Another promise broken.
Yesterday, we learned that October’s consumer price inflation figure had rebounded to 2.3%, the highest level in six months.
There’s worse to come.
The Bank of England says inflation will hit 2.5% by the end of the year. After Budget tax hikes come into force in April, it will head towards 3%. Planned interest rate cuts will now be scrapped.
The cost-of-living crisis is back and is set to get worse. Especially with Reeves’ inheritance tax war on farmers threatening food production.
Energy prices are set to rise again in January and again in April. They could climb higher still as energy secretary Ed Miliband’s war on North Sea oil leaves us hooked on costly fossil fuel imports.
Labour has created chaos in short order, and I haven’t even mentioned the Winter Fuel Payment debacle. It needs to rethink. Everything.
If we do tip back into recession next year, Starmer and Reeves won’t be able to blame the Tories. This one will be down to them.
