It’s not our fault, but we’ll have to pay anyway. It’s certainly not fair, but there isn’t anything we can do about it.
This week brings judgement down on our disastrous Chancellor, as three economic authorities deliver their verdict on her tenure.
Two have already spoken, and the verdict is thunderous. The third is due tomorrow and may strike a mortal blow at Reeves’s reputation.
Or what’s left of it.
On Monday, the respected EY Item Club shoved Reeves further along the road to hell by slashing its economic growth forecast for 2025.
It originally predicted GDP would grow at a wretched 1.5%. Now, it’s cut that to a threadbare 1%.
EY blamed the Chancellor’s record tax-raising Budget in October, primarily her decision to slap an extra £25 billion of National Insurance (NI) contributions on employers, coupled with an inflation-busting hike to the minimum wage.
This will squeeze profits, hit investment, raise prices, destroy jobs and drive unemployment up to 4.6%.
And that’s just the start of her torments.
Last night, tax and spending watchdog the Office for Budget Responsibility (OBR) handed Reeves its growth forecasts for 2025. She’ll announce its verdict on March 26, as part of her Spring Statement.
But leaks suggest another downgrade is coming. This will pour still more brimstone and treacle onto the Chancellor.
Ruth Gregory at Capital Economics predicts the OBR will revise down its GDP growth forecast for last year from 1.1% to 0.7%, according to The Daily Telegraph.
Given that the economy grew 1.1% in the first half of 2024, under the supposedly useless Tories, this suggests it SHRANK in the second half, under Reeves.
Gregory predicts the OBR will slash its 2025 forecast from 2% to 1.3%. I suppose that’s better than EY’s 1%. But nowhere near good enough.
The economy should be growing must faster, given that Reeves is pumping an extra £70billion into it this year. So much extra tax and borrowing – for so little growth.
The final verdict lands tomorrow, from the Bank of England (BoE). It’s expected to cut interest rates from 4.75% to 4.5%. It will also deliver its economic outlook, and the signs are grim.
Sir Charlie Bean, former senior official at both the OBR and BoE, has gone Biblical on the Chancellor.
He’s blasted Reeves for destroying growth in her first six months, calling her employer’s NI hike a “cardinal error”.
The only way struggling companies can fund this is by laying people off, Sir Charlie says.
Reeves has made a big noise about getting the long-term jobless back into work. Yet Sir Charlie pointed out that most would have moved into minimum-wage jobs, which the NI hike is destroying at speed.
The final judgement lands on 26 March, when Reeves is forced to share the OBR’s verdict with the rest of us.
As borrowing costs rise the UK is already on a fiscal knife-edge. If the OBR says Reeves is at risk of breaking her fiscal rules, she’ll have to hike taxes and cut spending. Or both.
Reeves should then be cast into the wilderness but won’t. Labour hasn’t got anyone else. It’s taxpayers who face retribution – for her sins.
One day Labour will feel their wrath.
