Rachel Reeves has failed on her number one mission of economic growth, as new GDP figures confirm the UK economy continues to flatline. The data cements her legacy as one of the most ineffectual Chancellors in recent history and explains why she will follow Keir Starmer out of Downing Street when Andy Burnham takes over on Monday.
Tax Hikes Choke Growth
Two years of higher taxes have choked the economy, according to analysis by political editor Martyn Brown. Burnham has signalled he wants even more taxes to pay for more benefits, raising fears that the economic stagnation may worsen under the new leadership.
Whoever Burnham appoints as Chancellor will face a Herculean task to turn the nation's economic fortunes around. The fallout from the Middle East conflict will continue to bite for the rest of the year, especially with soaring energy costs heading into winter.
Inflation and Unemployment Pressures
Inflation remains stubbornly above target, punishing hard-pressed consumers, while unemployment must be brought down. Welfare spending continues to balloon, and Britons face the prospect of more tax rises when the new Chancellor delivers their first Budget in the autumn.
Burnham has also refused to rule out imposing a “wealth tax,” admitting he might “ask for a little more.”
Battle for Chancellor
Burnham's government-in-waiting is already in chaos over the key Treasury role, as he dithers between appointing Ed Miliband or Shabana Mahmood. A bitter briefing war has erupted in Westminster following reports that Energy Secretary Miliband's dream of taking charge at the Treasury is set to be shattered.
Home Secretary Mahmood has emerged as the favourite, with one ally of Burnham claiming she is “nailed down as Chancellor.” However, with just days until Burnham enters Downing Street, he has still not made up his mind about an appointment that will set the tone for his government.
Friends of Foreign Secretary Yvette Cooper are still pushing her for the role, underlining her experience as a Treasury minister in the last Labour government. Miliband, a former adviser to Chancellor Gordon Brown, has long been seen as a favourite and has been working with Burnham on economic plans for government.
But the prospect of Miliband taking charge at the Treasury, after introducing economically damaging green policies in his current role, has triggered a ferocious backlash uniting business, trade unions, and Blairite Labour MPs.
Miliband's Net Zero Plans Criticised
Sharon Graham, general secretary of the powerful Unite union, has warned Burnham that Miliband's obsession with Net Zero would be a “noose around the neck” of job creation. A Bloomberg survey of investors found just 5% support installing the former Labour leader as Chancellor.
Mahmood fared only slightly better, with 11% support. Former health secretary Wes Streeting was the frontrunner with backing from more than 30% of investors, but he has fallen out of favour in the Labour Party.
Tory leader Kemi Badenoch summed it up succinctly: “We are heading for chaos with Labour obsessing about who they can tax to pay for more benefits. It doesn't matter who is in charge, the problem is the Labour Party.”
