You may have heard that inflation is up. No, this isn’t a rerun from last year. It really is up. Again. So much for the “fiscal discipline” and “costed plans” Rachel Reeves bleated on about when she was soliciting votes like a beggar with a tin can. The reality has come to bite: high inflation is back, and it’s here to stay. And it’s ordinary people – working families, renters and small businesses – who are paying the price for this Government’s stubborn refusal to change course. The truth is grim. Britain is now on track to have the highest inflation rate in the G7.
That means another long winter of soaring food prices, energy bills, rents and mortgages. For most people, it’s the weekly shop that stings. Bread, fruit, dairy; everything costs more than it did a year ago, and the gap between pay packets and living costs grows wider by the month. Reeves can talk about “stability” all she likes, but when a family’s food bill jumps by 20 or 30 quid a week, that’s not stability, it’s a slow-motion decline.
At this point, it looks like the Chancellor’s entire strategy is to point to France and say to the bond markets: “Well, at least we’re not that bad.”
Sadly, that’s not much comfort. Drawing comparisons with a country led by a hollow government only highlights how thoroughly Britain has been dragged into the same swamp of stagnation. Our leaders aren’t just incompetent; they’re willingly so.
The IMF has now joined the chorus, trimming Britain’s growth forecast for 2026 and warning that the economy will remain anaemic for years to come. Even the supposed good news of a marginally improved growth projection for 2025 was spun by Reeves as a victory.
A 0.1% upgrade is not a plan; it’s a rounding error. Yet she paraded it like a gold medal at the fiscal Olympics. Meanwhile, the Bank of England is refusing to cut rates. So, mortgage holders stay squeezed, landlords pass on their pain to tenants, and businesses still can’t get affordable credit. The cost-of-living crisis, far from easing, is becoming structural.
If the misery index (a rough measure that adds inflation to unemployment) is anything to go by, the coming months will be worse still. The latest jobs data paint an ugly picture. Britain’s labour market is quietly deteriorating.
The number of payrolled employees has fallen, replaced by a rise in casual and self-employed work – marking an end for Labour’s promise to end ‘insecure employment’. Employers warned that higher National Insurance Contributions would cost jobs, and they were right. Companies are simply finding creative ways to keep people off the books.
Add to that record migration levels and a stagnant productivity rate, and you have the perfect recipe for economic malaise: more people chasing fewer stable jobs while the state rewards inefficiency. The public sector is still pocketing above-inflation pay rises, even as output flatlines. A society cannot grow richer by paying itself more for doing the same, or less.
The Bank of England’s target is 2% inflation; we’re still hovering around twice that. The OECD now expects Britain’s inflation to end this year at 3%, down barely a tick from the summer, and still well above target for years to come.
Among major economies, only the likes of Turkey and Argentina are faring worse. Britain isn’t a banana republic, but it’s starting to look like one: heavy debt, weak productivity, and a government that keeps spending as if the laws of economics have been temporarily suspended.
Reeves’s instinct, as ever, is to tax and spend. Her latest bright idea of scrapping the two-child benefit cap might play well in the Labour backrooms, but it only fuels the perception that her priorities are skewed. The people footing the bill are those who work, save, and invest – the ones the government should be supporting, not punishing.
After 14 years in opposition, Labour had time to craft a serious plan. Instead, they’ve reverted to type: reward the unions, appease the welfare lobby and hope the numbers work. They won’t.
Britain’s debt mountain is increasingly index-linked, meaning that every uptick in inflation makes the national interest bill swell further. Yet there’s little sign that Reeves, or the Prime Minister, for that matter, grasps the scale of the problem.
The Government’s messaging is no better. They keep blaming Brexit (and Farage) for everything that ails the economy, as if that’s still a credible excuse years on. It’s not – especially for the millions of families staring at yet another punishing winter.