A competent Chancellor would break Britain’s high tax, high spend doom loop
Economic alarm bells are blaring, but Rachel Reeves has stuck her fingers in her ears, says shadow chancellor Mel Stride
Britain’s economy is on the brink. We’re set for the highest inflation in the G7; unemployment is at a four-year high; and GDP growth is pitiful – in July it was literally zero.
Meanwhile, borrowing is spiraling out of control, exceeding forecasts by a staggering £11.4bn between April and August. It all makes for an incredibly depressing picture.
And thanks to Keir Starmer and Rachel Reeves, it’s only going to get worse. This week the OECD confirmed what businesses have been saying from the start: Labour’s tax hikes are a drag anchor on growth, which will slow even further in 2026.
And the S&P PMI – an indicator of business confidence – brought more bad news, with employers facing a ‘sharp’ increase in costs due to Rachel Reeves’ maiden Budget, and fearful of yet more tax rises in the autumn.
And with good reason. At Labour’s Conference this weekend, MPs will be talking about funneling more of our money into the Treasury’s coffers. That is, when they aren’t plotting to bring down Keir Starmer – who has shown appalling judgement since becoming Prime Minister.
Alarm bells should be ringing. But the government have stuck their fingers in their ears.
A competent Chancellor would urgently change course. Instead, we’ve got one who is likely to double down, following a summer of pitch-rolling for her inevitable tax rises to paper over the cracks of her economic mismanagement.
Reeves has failed to grasp one of the most basic principles of economics: it’s businesses that drive growth, not governments
That might be why she has failed to grasp one of the most basic principles of economics: it’s businesses that drive growth, not governments. But given none of Labour’s front bench has any real-world business experience, it really is no surprise that they don’t understand business.
Britain needs proper leadership that supports enterprise and a healthy economy, rather than a government that seizes cash from businesses to plug the gaping holes in its sums.
There are so many issues to tackle. But one of the most urgent priorities should be bringing down the welfare bill and getting people into work.
Kemi Badenoch has offered to put party politics aside and work with Keir Starmer to get benefits under control.
That offer still stands. Starmer should put the national interest first, and avoid the welfare car crash that we can see on the horizon. But with deputy leadership hopeful Lucy Powell urging Labour to scrap the two child benefit cap last week, I don’t think we’re in danger of that any time soon.
Other parties need a reality check too. Reform also want to lift the two-child benefit cap and hike welfare spending but have no idea how to pay for it. This is fantasy economics.
The Conservatives are the only party saying Britain must live within its means.
Fiscal responsibility is the basis for a sound economy, and gives businesses the certainty they need.
If the government sticks to its current high tax, high inflation, low growth doom loop, piling up debt all the time, we will be paying the price for generations to come.