Labour want to hear an alternative to their economic chaos – well I’ve got some advice for Rachel Reeves
FOR a Chancellor who made economic growth not only her “number one priority” but her only jail break, Wednesday’s Spring Statement will be a humiliation.
As Rachel Reeves rises to read out the figures, her plan to kick-start growth and avoid more pain will be in tatters.
And no one will really buy the excuse it’s all the fault of Donald Trump and his tariffs.
The tax-raising pain of October’s Budget has not even kicked in yet, and already the backbone of Britain — our small businesses — have taken a mighty kicking.
Confidence is down, sackings have begun and expansion plans have been snuffed out — and that’s before the new workers’ rights laws make hiring even trickier.
A Federation of Small Businesses survey post-Budget revealed a third of small employers expect to slash staff this year — up from 17 per cent before Reeves hit them with taxes and Angela Rayner began to legislate them into the ground.
Wiped out
Some 51 per cent of small employers say labour costs are one of the greatest barriers to growing their business.
So who was surprised when the Bank of England downgraded its growth estimates for this year from 1.5 per cent of GDP to just 0.75 per cent.
It’s thought the hallowed Office for Budget Responsibility will halve its own guess to one per cent on Wednesday.
Either way, Reeves is in the red, with £10billion of breathing space wiped out.
There will be lots of talk of security at home and abroad, with defence spending trickling down into domestic jobs, but the Chancellor will be hard pushed to mask the obvious — her gamble has not paid off.
The plan was to kick-start GDP growth to avoid a Labour government having to slash the size and scale of its beloved state. That plan has demonstrably failed.
“Rachel from Accounts” has been forced to become “Rachel with an axe”.
After six months of talking down the country almost into recession and dropping a giant anvil on business, how far she is the author of her own misfortune will likely be the subject of plenty of jibes in the Commons.
But to her credit Reeves has batted away repeated pressure from within the Treasury to hike taxes again, or freeze income tax thresholds to pick the pockets of Britain by stealth.
Lefty economists have also been given short shrift with their demands to increase the tax burden even more, with Reeves making clear it is “not a lever she is willing to pull” again yet.
Meanwhile Labour MPs have demanded more borrowing over cuts, but the markets wouldn’t have it even if Reeves fancied it.
Which commendably, again, she does not.
Instead, she has made clear it is unsustainable for the state to be spending nearly £1.4TRILLION a year.
This is the worst time possible to make employment more expensive as all you are doing is increasing the incentive to automate.
CEO
Those howling — and there will be plenty, not least on her own side — will be told to go away and come up with a plan that doesn’t involve a market meltdown or making the last remaining pips squeak.
“Rachel hears the criticisms but she doesn’t hear the alternative”, her folk say.
But while that may get her through this week, I fear it’s going to be more than just a spring of pain for the Government when the National Insurance hikes kick in from April and barmy plans to give workers full employment rights from day one become law.
Take the West Country family restaurant boss who is in tears because she says that for the first time in two decades she cannot afford to open in the evenings this summer.
Profit margins in seasonal hospitality are wafer-thin at the best of times, but with higher taxes and the new higher minimum wage, she is left with no choice but to hire fewer people, for fewer hours, to serve fewer customers and to contribute less to the local economy.
‘In for a shock’
“Thirty other restaurants and pubs in the local area are facing the same dilemma,” she says, with a warning that this summer’s staycationers are in for a shock when our UK holiday spots are decimated.
Or the recruitment boss who had planned to expand his company to 15 workers next year.
“We’ve now gone down to five and have just onboarded two people in the Philippines.”
So cheaper wages and fewer man-hours spent on red tape, but more Brits out of a job.
The CEO of a £100million tech start-up told me: “We’ve made five per cent of the company redundant in order to offset the NI rise.”
And he warns they won’t be the last, thanks to AI and the Government’s employment legislation: “This is the worst time possible to make employment more expensive as all you are doing is increasing the incentive to automate.”
The Chancellor wants to hear an alternative?
Well, how about not making life even harder than you already have for the people trying to help you grow the economy.
It may be too late to U-turn on the Employer NICs hike, but the Rayner red tape can still be abandoned.
SOME bemusement that Sir Keir Starmer decided to take a writer from the achingly dull New York Times with him to greet the returning submariners on our nuclear sub HMS Vanguard last week, left.
The American paper famously writes dreary 10,000-word diatribes about Britain and Brexit and would not be my idea of a welcoming party on the Firth of Clyde after nearly seven months at sea.
But it is all part of the extended, and at times unedifying, attempt by the Prime Minister to grease up to Donald Trump.
Those in the know tell me that the first thing Trump reads in the morning is the NYT – despite having a decades-long loathing of the paper.
“He hate-reads all the New York papers first thing”, my mole tells me.
And Starmer’s slurping would have even the vain US President choking on his breakfast Diet Coke.
“On a person-to-person basis, I think we have a good relationship,” Sir Suck-up told the NYT.
“I like and respect him.
“I understand what he’s trying to achieve.”
TWO weeks ago I brought you the news of Nigel Farage’s unlikely and high-risk alliance with fellow Brexit mastermind Dominic Cummings after years of civil war.
But it seems Nige has got a bit of a taste for making friends across the divide.
Onlookers were stunned on Monday night to see Deputy PM Angela Rayner enjoying a Face-Time call with Farage on the Commons Terrace.
She was teasing him for being in America again rather than Westminster, but all very chummy.