ALEX BRUMMER: Reeves hasn't 'fixed the economic foundations' - she's presiding over a looming disaster that could be as bad as Greece
As the Chancellor lives it up with her fellow G7 finance ministers at the £350-a-night Rimrock Resort Hotel in Canada 's Rocky Mountains, her credibility at home is draining away.
Rachel Reeves 's claims to have fixed the public finances are sounding increasingly delusional as the economic outlook becomes more grim with every passing day.
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Daily Mail
2 hours ago
- Daily Mail
Angela Rayner's workers Bill 'is a wrecking ball for the UK economy' that could wipe out struggling businesses, Tories warn
British businesses have been urged to rise up and fight Angela Rayner 's crippling new labour laws, amid dire warnings of the devastating effects they will wreak on the economy. Conservatives have sent an open letter to company bosses this weekend urging them to speak out against the Deputy Prime Minister's radical plans – or be 'sleepwalked into disaster'. Ms Rayner has been accused of taking a 'wrecking ball to the economy' with her Employment Rights Bill – which has also been dubbed 'the Unemployment Bill' over fears it will deter firms from taking on staff. The proposals, currently being debated in the Lords and due to take effect later this year, will make it more burdensome to employ workers and will leave businesses vulnerable to ruinous strikes. Central to the plans are the repeal of Tory trade union laws which will reduce the threshold for strike action and make union funding of the Labour Party automatic. But it also contains a raft of other measures, including the end of zero-hours contracts, strengthened redundancy rights, more flexible working and the power for ministers to take companies to employment tribunals on behalf of employees even if they do not want to sue. The Bill has led to tensions in the Cabinet, with Chancellor Rachel Reeves trying to dilute the measures as she battles to revive a moribund economy. Asked by The Mail on Sunday this weekend if she was working to limit the economic damage which Ms Rayner's measures are expected to cause, the Chancellor did not deny she was trying to mitigate the effects, saying: 'We talk all the time to businesses.' In the open letter, Shadow Business Secretary Andrew Griffith says he has been moved to act because he is 'genuinely concerned that British businesses are being sleepwalked into disaster' and the Tories cannot oppose it alone In the open letter, Shadow Business Secretary Andrew Griffith says he has been moved to act because he is 'genuinely concerned that British businesses are being sleepwalked into disaster' and the Tories cannot oppose it alone. He writes: 'We need more voices to persuade the Government to listen. The Government's own calculations – which many consider to be an underestimate – say this will cost British businesses £5 billion a year and the economy 50,000 jobs... This is not good for the economy. I know it and every business I speak to around the country knows it. 'I urge you to please share this letter with others, seek advice on the impact of the Bill from your professional advisor and encourage business groups to speak up clearly on your behalf.' Speaking to this newspaper, Mr Griffith said: 'The economy badly needs the growth that only business can create. Yet Labour's Bill for Unemployment is a trade union charter that will increase strikes, slash jobs and raise prices. 'Going back to 1970s-style domination by the unions is the very last thing Britain needs right now and shows just how little this socialist government understands business. Angela Rayner is taking a wrecking ball to the UK economy.' He was echoed by a chorus of leading business figures, including Lord Karan Bilimoria, founder of Cobra beer and UK chairman of the International Chamber of Commerce. He said: 'Making it easier for workers to strike will inevitably increase their number and frequency. This is like the 1970s, and look where that got us. We were called the sick man of Europe. 'We don't want to go back in time. Of course, you want fair employee rights, but there's got to be a balance. If you create the environment this bill is putting us on the path towards, it's going to be very damaging to business and our economy.' He called on the Government to 'think twice' before pushing ahead with the reforms. Luke Johnson, entrepreneur and former chairman of Pizza Express, said: 'At a time when unemployment is rising, the economy is weak and the number of failing businesses is on the increase, introducing a new swathe of burdensome regulations is, to me, little short of madness. 'In the 1970s our country was going broke and we had to go to the International Monetary Fund for a bailout. 'It feels as if we are headed back towards that period. I lived through that time. But a lot of the MPs writing and supporting this bill are too young to remember what it was like. '[Angela Rayner] doesn't even speak the same language as people who work in the private sector. She has no clue what it's like to build a business and have your house on the line if you go broke, or struggling to pay wage bills and bank loan repayments each month. 'She just doesn't care. She only ever talks to people in the public sector, civil servants and trade unionists. But eventually, their ideology is going to collide with reality and unfortunately, they are going to drag the economy into a serious recession.' Alex Veitch, of the British Chambers of Commerce said: 'There remains a high risk of unintended consequences that could limit employment opportunities and economic growth.' And Luiza Gomes, from the British Retail Consortium, said: 'Maintaining a 50 per cent threshold for strikes is important to ensure ballot results legitimately and accurately reflect the consensus amongst workers, rather than the minority view.' A Labour spokesman said: 'The public will see right through the sheer hypocrisy of a party that crashed the economy and family finances now opposing better rights for workers. 'Labour do not think it's fair for workers to be sacked without any good reason or denied sick pay from the first day they are ill. The Tories and Reform need to explain why they do. 'These measures are developed with business, and good for workers and the economy.'
Daily Mail
2 hours ago
- Daily Mail
World's biggest bank JP Morgan turns bullish on British bonds
The world's biggest bank has turned positive on Britain's creditworthiness as Rachel Reeves lines up more tax rises to balance the Government's books. In a rare boost for the Chancellor, JP Morgan Asset Management said the cost of servicing UK debt – known as gilts – should fall but only because the Government is 'much more constrained by its own fiscal rules' than other countries. The US bank, whose £2.7trillion of assets managed are almost as big as the British economy itself, reckons Reeves' rules are 'untouchable' and will limit the amount she can borrow, making gilts more attractive to lenders because fewer of them will need to be sold. But JP Morgan said the Chancellor will still face 'difficult decisions' filling a hole of up to £15billion in the public finances after she outlined big increases in health and defence expenditure in her recent spending review – despite the economy continuing to flatline. Reeves has ruled out raising the headline rates of income tax, VAT and employees' National Insurance in her upcoming Autumn Budget, but has left the door open for raiding pension pots and extending a freeze on how much can be earned before taxes are paid. It comes as growing concerns about the state of the public finances have pushed the cost of government borrowing above levels seen under Liz Truss when investors who lend money to the Government were spooked by the former Prime Minister's package of unfunded tax cuts in the now infamous 'mini-Budget'. But JP Morgan, run by veteran banker Jamie Dimon, has turned into a buyer of British bonds, in part because Donald Trump's tariffs and tax policies make assets such as the dollar and US debt a less appealing bet. 'The risk/reward trade-off for UK Government debt appears more attractive relative to many of our counterparts around the world,' said the bank's Hugh Gimber. 'Gilts are arguably best positioned, given a relatively weak growth backdrop and a government that is more constrained by its own fiscal rules,' he added.
Daily Mail
2 hours ago
- Daily Mail
HAMISH MCRAE: Rising inflation leaving those with the least paying the most
Let's be honest. We're going to get a lot more inflation. Why? Two reasons. First, Rachel Reeves and the rest of this Government secretly quite welcome it. Second, the Bank of England isn't strong enough to tackle the scourge, even though that is its most important job. If you think that is too cynical, look at the evidence of the past few days. We had inflation figures showing that the Consumer Price Index, the CPI, was running at 3.4 per cent. It's bad enough that this is way above the Bank's 2 per cent target, but dig deeper and the numbers get worse. Allow for owner-occupied housing costs, the so-called CPIH, and the figure is 4 per cent. This is a more accurate tally for most of us since 64 per cent of our homes are owner-occupied. It gets worse. The RPI, the Retail Prices Index, which sets the costs of many business contracts and the charges on the index-linked portion of our national debt, rose 4.3 per cent. On any rational assessment, inflation is running at double the target rate. You would imagine there would be some debate at the Bank about increasing interest rates, particularly since it expects inflation to continue around this level, maybe higher, through the autumn. But no, three of the Monetary Policy Committee voted for a cut, the rest voted to keep rates where they are. This says that they are more worried about a soft economy, and in particular the job losses, that are feeding through as a result of the increase in employers' National Insurance, than they are about inflation. Of course, they are right to be concerned about the economy. We all are. But in effect, they are having to compensate for what most economists would agree was a mistake by Rachel Reeves: clobbering businesses in her Budget last year. Now look at all this from the Chancellor's perspective. She is in a jam. Revenues are weaker than she and the Office for Budget Responsibility expected, and it looks like there will have to be tax increases in the Autumn Budget. That is before all the extra money needed for defence and all the other pressures on spending pile in. There is, however, one thing that is helping: fiscal drag. Higher inflation boosts revenues as rising wages push people into higher tax brackets – even if in real terms their pay does not rise at all. Think back to Reeves' statement on public spending ten days ago. All that stuff about millions more for a list of projects, and a reference to lower interest rates, but barely a squeak about inflation. For what it's worth, the CPI in June last year – the month before Labour won the General Election – was exactly on target: 2 per cent. It's called the money illusion. The Government can say it is spending more money, but in real terms, it may end up spending less. In defence of our government, we are not alone. In the US, Donald Trump's tariffs will inevitably increase prices. In Europe, rearmament will be financed by more borrowing, which will pile pressure on prices there. But the fact is, our inflation figure of 3.4 per cent compares with 2.4 per cent in the US and 1.9 per cent in the eurozone. No wonder our government has to pay more to finance its national debt than any other G7 nation. The harsh judgment on the Bank of England is that it has been less effective in carrying out its prime duty than the US Federal Reserve or the European Central Bank. The thing that worries me most about inflation, even more than the economic costs, is the social damage it causes. Those with strong bargaining power, like heavily unionised train drivers, can negotiate above-inflation pay rises. But those in weaker positions cannot, and right now risk losing their jobs. If asset prices soar – and despite global mayhem, shares are close to all-time highs – those with the greatest wealth gain the most. The most sophisticated investors benefit. But those unable to pay for the best advice see the value of their savings whittled away. It is the fault of our government and our central bank. We deserve better.
