“Honey, I blew up the economy!”
These are six words no Prime Minister or Chancellor wants to say when they get home.
But the Bank of England delivered a scathing verdict on Labour’s first six months in power when it halved its growth forecast for this year to a mere 0.75%.
Rachel Reeves arrived in power as a champion of growth but on her watch the country has lurched to the brink of recession. Growth of just 0.1% is expected for the first three months of this year.
The Bank is trying to pump life into the economy by cutting interest rates by a quarter point to 4.5%. The outlook is so grim that two members of its Monetary Policy Committee wanted a full half-point cut.
But it is cutting borrowing costs right at the moment when the Government is hiking up taxes for employers through higher National Insurance contributions. The Bank found businesses described Ms Reeves’s Budget as a “deterrent to investment”.
A country battered by the cost of living crisis is now expected to suffer the effects of inflation climbing to 3.7%. This is driven by rising energy prices and household bills – and comes as anger continues to burn at the Government axing universal help for pensioners with winter fuel costs.
An even greater worry for many households is the expected increase in unemployment, which is expected to climb to just under 5%.
Ms Reeves is working valiantly to change the mood music by championing a new runway for Heathrow and Sir Keir Starmer is trumpeting his support for new nuclear reactors. But none of this hides the fact that households and businesses across the country face yet another difficult year.
Labour came into office with the “mission” of securing the “highest sustained growth in the G7”. It had warned that Britain is “set to be poorer than Poland by 2030 and poorer than both Hungary and Romania by 2040”.
A team that cast themselves as economic superheroes is now presiding over a situation that looks worryingly like “stagflation”. The Conservatives remain tarnished by memories of the chaos that doomed Liz Truss’s time in office but if the country decides Labour cannot be trusted with the economy then its mighty Commons majority looks fragile.
Kemi Badenoch knows she must restore the Conservatives’ reputation for economic competence. She needs you to go into the polling station thinking that a Tory Government will make you better off.
But across Britain there is an acknowledgement that Britain – like other European countries – has a growth problem. How can any government get the economy to grow at a fast enough rate to fund the gargantuan cost of world-class public services and the benefits system while finding extra cash for defence?
There is no easy route to jump-starting growth but employers across the country will point to the National Insurance hike as a perfect example of what not to do. Rather than pumping rocket fuel into the economy, the Treasury has drilled a hole in the tank.
