Andrew Neil has warned Sir Keir Starmer‘s party that it is far from meeting its pledge Britain will become the fastest growing economy in the G7.
The columnist and broadcaster warned that instead of boosting Britain’s gross domestic product (GDP), Prime Minister Sir Keir Starmer’s party now faces having to steer the economy clear of recession.
His criticism comes after Threadneedle Street said policymakers are now expecting zero GDP between October and December, even weaker than the 0.3% growth it had forecast in November.
Mr Neil said: “Bank of England refuses to cut interest rates because inflation rising again. Downgrades growth outlook for the last three months of this year to zero, from previous prediction of 0.3%.
“Cost of ten-year borrowing for the Government at just over 4.5%, over double what it costs Germany to raise money in global debt markets and far higher than France — even though both are in political crisis.
“Far from meeting its pledge for UK to become fastest growing economy in G7, Labour’s current main challenge is to avoid recession.”
In its election manifesto, Labour detailed its ambition for Britain to have the highest growth in the G7 over consecutive years by the end of the current parliament.
Since coming to power, the party has been accused of minimising the UK economy and announcing proposals that have pressured businesses, including a planned increase in employer National Insurance contributions.
Accelerated wage growth and inflation at 2.6%, above the Bank of England’s 2% target, have also added to uncertainty.
The Bank’s rate-setting policymakers reported on Thursday that the planned increase in the rate of employer national insurance and the national living wage could affect future inflation.
This is because businesses have indicated they might respond to higher taxes by raising prices or by laying off existing workers.
Government borrowing costs have risen to 4.58%, up from 4.47% a week ago. This compares to France’s 3.12% and Germany’s 2.3%, coming after former French PM Michel Barnier’s short-lived government collapsed and German Chancellor Olaf Scholz torpedoed his fractious coalition government and lost a vote of no confidence.
Starmer has already rowed back on Labour’s pledge to secure the fastest growth in the G7, with his “Plan for Change” detailing economic targets which aim for improvements in Brits’ living standards.
The sidelining of the election pledge suggests the party recognises how hard it will be for the party to secure faster growth than other G7 countries, such as the US, which saw growth of 3.1% from July to September.
Britain saw 0.1% growth over the same quarter, according to the Office for National Statistics – the first period under the new Labour government. The UK’s economy grew 0.5% from April to June.
There is now talk of the economy stagnating, with sluggish demand, a weakening jobs market and interest rates held at 4.75% after the Bank opted not to continue cutting its key base rate.
Despite the economic indicators flashing red, Sir Keir defended his first five months in office, telling a group of MPs on Thursday: “We’ve had a decade – slightly more – of stagnant growth or low growth, and we’ve got to turn that around.”
He said the Budget was intended to “stabilise the economy” and create the conditions for investment, adding: “We’ve obviously got to carry out reforms – to planning in particular, to regulation in particular – to drive the growth that we need.”
