Inflation will top 3% next year after Rachel Reeves Budget does its work (Image: Getty)
Labour chancellor Rachel Reeves has seen to that. While we can’t blame her for today’s figure, her Budget tax and spending hikes will drive prices even higher when they come into force next year.
Consumer price inflation climbed to 2.6% in November. That’s the second monthly increase in a row, after October’s 2.3%.
September’s slump to just 1.7% is now a distant memory. The cost-of-living crisis isn’t over yet.
October’s inflationary surge has sunk any hope of the Bank of England (BoE) cutting tomorrow.
Given the threat, Reeves was playing with fire in the Budget. And we’ll all get burned.
Last month, BoE governor Andrew Bailey warned said her “substantial” increase in public spending and taxes that “clearly raise the cost of employment” would drive prices higher.
More than 80 of the UK’s biggest retailers wrote to warn Reeves that both higher prices and job losses were a certainty thanks to the Budget.
Today, business economist Andrew Sentence warned of a grim 2025. “We’ve yet to see the full impact of higher public spending, borrowing and NI. Inflation headed for 3% plus next year.”
That’s the last thing we needed.
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Reeves will hit businesses with a punitive £25billion in extra national insurance (NI) charges from April 6, and they’ll pass on the cost by hiking prices.
The chancellor also increased the national minimum wage by an inflation-busting 6.7%. It’s good that lower earners get more but combined with the brutal NI hike it’s just more fuel on the inflationary fire.
Reeves also used the Budget to announce another £30billion of public spending, funded purely by borrowing money .
Her spending spree will throw yet more petrol on the flames.
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Some factors are beyond Labour’s control. The energy price cap increased by 10% from October 1, pushing up gas and electricity bills.
But even here, Labour is pursuing the wrong policy. Energy secretary Especially since he’s canning North Sea oil and gas projects at the same time.
As inflation returns, economic growth fades. Output fell 0.1% in September and another 0.1% in October.
Economists reckon . We’re being pushed towards recession. Now that is 100% down to Labour.
Starmer and Reeves killed growth stone dead by spreading doom and gloom ahead of the Budget – and afterwards when we saw what she’d done.
Slowing growth and rising prices means only one thing: stagflation. Labour is taking us back to the darkest days of the 1970s. That’s what you get for pursuing 1970s policies.