Rachel Reeves today blamed Brexit, austerity and the Tories for the grim state of Britain – as she admitted tax hikes are looming.
The Chancellor tried to slough off responsibility as she gave the clearest indication yet that more pain is coming in the Budget.
Challenged in a Sky News interview that she will need to fill a £30billion black hole in the finances, Ms Reeves said: ‘Of course, we’re looking at tax and spending as well.’
Despite previously claiming that Brits would be spared after her previous monster Budget raid, she argued that the government was still having to ‘undo some damage’ from leaving the EU.
The comments underline Labour’s desperate new tactic of trying to blame Brexiteers including Nigel Farage for the country’s woes.
That is despite critics arguing that Ms Reeves’ own policies have triggered an economic slowdown and rising borrowing costs.
Ms Reeves suffered a series of body blows yesterday as a stark report from IMF warned that inflation in the UK will be the highest for any advanced economy this year.
Adding to the bleak situation, official figures showed unemployment at a four-year high while at the same time wage growth has slowed sharply.
The darkening outlook prompted a top Bank of England official to warn last night that Britain faces a ‘hard landing’ with growing risk of recession.
Rachel Reeves tried to slough off responsibility as she gave the clearest indication yet that more pain is coming in the Budget
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Ms Reeves is trying to put a brave face on the situation at the annual IMF meetings in Washington today, claiming Britain is a ‘beacon of stability and growth’.
But she was grilled in the interview on concerns that the UK is in a ‘doom loop’, where she crushes growth by increasing taxing – and then has to push the burden up again to make the government’s books balance.
‘Nobody wants that cycle to end more than I do,’ she said, before stressing she would not ‘would not use those words’ to describe Britain’s position.
Ms Reeves effectively confirmed that the Office for Budget Responsibility is downgrading productivity forecasts after years in which they have proved too optimistic. That is one of the main contributors to the strain on the public finances.
Pushed that there are ‘tax rises coming down the tracks’, Ms Reeves replied: ‘Yeah, but I think… in the terms of the ambition of this government it is big… ‘
Told that she had just agreed tax rises were coming, Ms Reeves said: ‘I was really clear during the general election campaign – and we discussed this many times – that I would always make sure the numbers add up.’
She said: ‘Challenges are being thrown our way – whether that is the geopolitical uncertainties, the conflicts around the world, the increased tariffs and barriers to trade. And now this (OBR) review is looking at how productive our economy has been in the past and then projecting that forward.’
Ms Reeves said she would not ‘duck those challenges’.
‘Of course, we’re looking at tax and spending as well, but the numbers will always add up with me as chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof,’ she said.
Asked if she was planning to blame Brexit for the state of the economy, Ms Reeves said: ‘So the Office of Budget Responsibility, who provide the independent forecasts for government, have done a review over this summer looking at the supply side of this economy.
‘Now that sounds quite technical but it has big implications for the projections for growth and therefore the projections of public finances, because our public finances depend on tax revenues coming in to fund things and they have consistently overestimated our productivity performance.’
The comments underline Labour’s desperate new tactic of trying to blame Brexiteers including Nigel Farage (pictured) for the country’s woes
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Pressed if that meant the problems were because of Brexit, Ms Reeves said it was up to the OBR to ‘set that out’.
‘But austerity, Brexit, and the ongoing impact of Liz Truss’s mini-budget, all of those things have weighed heavily on the UK economy,’ she said.
‘Already, people thought that the UK economy would be 4 per cent smaller because of Brexit.
‘Now, of course, we are undoing some of that damage by the deal that we did with the EU earlier this year on food and farming, goods moving between us and the continent, on energy and electricity trading, on an ambitious youth mobility scheme, but there is no doubting that the impact of Brexit is severe and long lasting and that’s why we are trying to do trade deals around the world, US, India, but most importantly with the EU so that our exporters here in Britain have a chance to sell things made here all around the world.’
