OPINION
Rising unemployment is a scandal Labour cannot afford (Image: Getty)
Labour MPs will head back to their constituencies next week for the summer recess with unemployment and inflation up and growth in retreat. A Government which set itself the “mission” of securing the “highest sustained growth in the G7” faces accusations of sabotaging prosperity.
All governments make gaffes but voters do not forget when Treasury decisions put their jobs in danger and leave their families worse off. The country is just beginning to see the consequences of Chancellor Rachel Reeves’s ￡25billion National Insurance tax raid on employers. Unemployment is at a four-year high, job vacancies are falling, wage increases are slowing and the economy shrunk in April and May.
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The Bank of England is widely expected to cut interest rates next month but that comes with dangers. Inflation hit 3.6% last month – far above the target of 2%. Households are facing higher food and transport costs – and the Chancellor’s jobs tax is once again blamed for piling costs on employers which are passed onto customers.
This looks frighteningly like “stagflation” – when nations face the toxic combination of damaging inflation, stagnant growth and higher unemployment. If this is what Britain’s future looks like then we are in the prelude to a greater crisis. How can a country which already faces punishing borrowing costs foot the spiralling bills for public services and benefits which Britons take for granted if growth dies?
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Rachel Reeves inflation economy chaos sparks calls for action - 'this will only get worse'
35 Comments
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Labour lives in fantasy bubble and can't see it's making mistakes of 1970s
60 Comments
Rachel Reeves makes desperate gamble to save her job - we're back to Labour boom and bust!
155 Comments
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43 Comments
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361 Comments
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10 Comments
Rachel Reeves' ‘staggering' economic chaos leaves Bank of England with ‘serious conundrum'
108 Comments
Rachel Reeves creates 'tax time bomb' that could shrink UK economy
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100 Comments
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35 Comments
UK savers ordered to check one thing now as inflation becomes 'quiet destroyer of money
Comments
POLL: Do you trust Rachel Reeves with Britain's economy?
144 Comments
Warning to anyone with a mortgage after inflation hits 3.6%
1 Comments
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165 Comments
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As things stand, the Chancellor will spend much of the summer recess trying to devise ways of plugging holes in the nation’s finances without annihilating hopes of growth and making it even harder for families and businesses to get by each month. Britons on holiday will worry about what taxes are about to hit their finances.
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The challenge for the Conservatives is to convince voters that Britain’s problems can be fixed and that the country could have a more exciting future than managed decline. Tories are fully aware of how voters were angered, alarmed and hurt by the economic turmoil which sent interest rates surging on their watch.
The Chancellor announced measures to stimulate investment at the Mansion House (Image: Getty)
The Conservatives are languishing at 17% in the polls, behind Labour on 23% and Reform UK on 29%. The Tories have come back many times in the past but their present difficulties are a reminder of what happens when a long-established party becomes the target of the electorate’s anger – and if unemployment climbs hire under Labour then Sir Keir Starmer and Ms Reeves will discover just how hard it is to reclaim trust.
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