David Vance SubstackRead More
Did you see that the IMF has just delivered another harsh dose of reality for the UK economy, slashing its growth forecast for this year to a dismal 0.8%? To put that in context, that’s the biggest downgrade among ALL the major advanced economies. Good job, Rachel!
A major factor for this is down to the fallout from the Iran conflict pushing up energy prices. For a country that still imports most of its energy, this hit feels us particularly hard – and it’s going to linger well into next year. We are vulnerable and the vulnerability is a direct consequence of mad Net Zero policies.
Bizarrely, Reeves tried to sound upbeat, saying that we go into this in a “stronger position” thanks to her government’s focus on stability. I find this level of delusionalism by the Chancellor really scary! The opposite is true – we went into this in the economic doldrums and that is directly down to HER choices. She then whines that the war isn’t ours, but insisted we’ll have to deal with the costs anyway.
The truth is different. This downgrade isn’t just bad luck from missiles and oil spikes. It shines a very unflattering light on years of poor economic policy choices that have left Britain vulnerable and struggling to build any real resilience.
Look at the numbers.
Inflation is now projected to hit 3.2% this year – joint highest in the G7– and energy costs aren’t going away quickly. I think the 3.2% is optimistic and it will be more than the IMF think. What this means is that the Bank of England might have to think twice about cutting rates further, or even pause altogether. Meanwhile, the IMF’s own chief economist has warned there’s little fiscal room left for any extra help for households or businesses without risking the public finances. So Reeves is caught between a rock and a hard place by her own choices.
Reeves’ boasts of stability sound really hollow when there’s no buffer for the shocks that inevitably come along. The Shadow Chancellor Mel Stride points out that hikes in employers’ National Insurance contributions and business rates in the autumn budget were self-inflicted wounds. He is quite right. High streets are seeing more shops pull down the shutters, smaller firms are being squeezed, and costs are getting passed on to workers and customers. Unemployment is edging higher, and the jobs market is cooling. All of this from a Government that came to power insisting it was focused on economic growth.
None of this shows a dynamic, growing economy that ministers keep promising. It feels much more like managed decline dressed up with public spending that props up the figures without creating any lasting private-sector strength.
For far too long, UK Governments have boasted about turning Britain into the fastest-growing G7 economy. Yet here we are yet again, lagging behind our peers, with productivity flat. High taxes, endless red tape, and an energy policy that’s delusional are the factors driving our decline and those are all direct choices made by Labour!
