ALEX BRUMMER: An totally dismal financial image …and Reeves has solely herself in charge

How deceitful, how stale, Labour’s election pledges look now. They promised the country change, growth and no tax increases for ‘working people’, however slippery that term was.

Instead, in six short months, the only ‘change’ this Left-wing administration has delivered is a stagnating economy and yet more inflation.

Notoriously, Rachel Reeves hiked taxes by £40 billion in her first Budget, thanks to a vicious increase in employers’ National Insurance – a move that is having a baleful effect on the very ‘working people’ she and her colleagues mendaciously promised to protect.

Redundancies are zipping up, job vacancies are vanishing and higher prices are already hitting the shops.

At the very least – after the Tories returned consumer price inflation to its 2 per cent target – homeowners and businesses might have looked forward to lower mortgages and cheaper borrowing. 

Yet now the brakes have been applied by the Bank of England.

But in almost every other Western nation, the cost of borrowing is coming down.

During the election campaign, Labour made hay with claims that the Tories had ‘crashed the economy’. 

Rachel Reeves (pictured) hiked taxes by £40 billion in her first Budget, thanks to a vicious increase in employers’ National Insurance

Blurred image of office workers crossing the London bridge in early morning on the way to the City of London

So it is truly remarkable that Keir Starmer’s Government is now more distrusted by the bond markets than Britain was at the height of Liz Truss’s tax-cutting Budget in autumn 2022.

The cost of ten-year borrowing for the Government stands at just over 4.5 per cent: more than double the cost of raising money on global markets that Germany pays, and far higher than France, while those countries face political chaos.

The economic picture is dismal – and we are still only a few months in to this long Labour term. 

The return of ‘stagflation’, that miserable combination of negligible growth and a rising cost of living, must – I am sorry to say – be placed firmly at the door of the Chancellor Reeves. 

She has only herself and her high-tax, old-fashioned socialist policies to blame.

Yes, Labour inherited public finances in a poor state. But the only way of strengthening the national balance sheet is through growth and investment – something Ms Reeves and Sir Keir claimed to understand. 

Instead, money they could have devoted to these causes – or simply returned to taxpayers and businesses, letting them choose where to spend and invest – has been cancelled out by £22 billion in new taxes for the NHS and £9.4 billion or so of above-inflation pay agreements for the public sector.

Those settlements, together with Angela Rayner’s workers’ rights project, have created a mini ‘wage price spiral’ of the kind that helped to impoverish Britain during the 1970s.

To their shame, Starmer and Reeves have jeopardised growth and raised the spectre of stagflation. Their decisions are making us poorer. 

Can they turn it round – or are we destined to fall further behind our international competitors?