Chancellor Rachel Reeves was accused of destroying jobs and putting economic growth thanks to her “reckless choices”. The Chancellor was celebrating today after official figures showed gross domestic product (GDP) increased by 0.7% between January and March. But Conservative Shadow Chancellor Sir Mel Stride said she was ignoring inconvenient data which showed her decisions “have put that progress at risk”.
Treasury watchdog the Office for Budget Responsibility (OBR) has warned the economy will grow only half as quickly as expected, cutting its 2025 growth forecast down from 2% to 1%, while global body the IMF also downgraded the UK’s growth projection for both this year and next. At the same time, unemployment in the UK has risen. Sir Mel said the Chancellor’s decision to increase National Insurance, a “jobs tax”, played a huge part.
“While it’s welcome the economy is growing, both the OBR and IMF have downgraded the UK’s growth,” Sir Mel said.
“Labour inherited the fastest-growing economy in the G7, but their decisions have put that progress at risk.
“Labour’s jobs tax, unemployment bill and reckless choices have seen the number unemployed rise by 10% and working families £3,500 worse off.
“Only the Conservatives believe in low tax, free-enterprise and less regulation, giving business the conditions to create good well paid jobs and wealth in our economy.”
Anti-poverty campaigners the Joseph Rowntree Foundation said families were actually getting poorer once soaring bills are taken into account – and forecasts show the average family will be nearly £200 a year worse off next year compared to this year in real terms, and £750 worse off by 2029.
Alfie Stirling, Director of Insight and Policy at the Foundation, said: “The real test for the government’s growth mission is whether the UK economy is delivering greater financial security for families. But beneath the froth of quarterly GDP figures the government risks presiding over the first parliament on modern record to see a fall in living standards from start to finish, with the poorest suffering worst of all.
“As the Chancellor has pointed out herself, families experience the economy not in terms of percentage points of GDP but by the pounds in their pockets. A parliamentary term that ends with families worse off than when it started will prove a difficult record to defend at the ballot box, with this month’s local elections offering an early indication.
“Reversing the dire outlook for families requires an immediate and concerted shift in strategy from government. Direct and targeted improvements in family living standards must move to the centre of the plan for growth. Neither families, or the government, can afford to wait.”
The GDP figures showed the UK economy grew at the fastest rate in a year over the first quarter of 2025. Growth was driven by the country’s dominant services sector, which was strengthening in the opening months of the year despite some businesses warning that they were grappling with rising costs.
Ms Reeves said the figures “show the strength and potential of the UK economy”.
“Up against a backdrop of global uncertainty we are making the right choices now in the national interest,” she said.
Prime Minister Sir Keir Starmer said the figures showed he was meeting his goal of having the highest growth in the G7 group of advanced economies.
“But I know the Tory cost-of-living crisis isn’t over – we will go further and faster to deliver for working people,” Sir Keir said.
Ms Reeves acknowledged that there was “more to do”, with the latest ONS figures covering the period before tax rises and US President Donald Trump’s “liberation day” tariff announcements.
Company national insurance contributions increased from April, which some economists have said will force firms to cut jobs.
And the US has imposed a 10% blanket tariff on most UK goods entering the world’s biggest economy, which is expected to directly impact exporters and has led to heightened uncertainty affecting businesses and households.
The latest figures show that economic growth slowed to 0.2% in March, from 0.5% in February, as activity among UK factories began to slump.