Rachel Reeves humiliated as living standards plunge under Labour after Budget catastrophe

Millions of hard-pressed Britons are suffering a “personal recession” because of Labour’s mishandling of the economy and sky-high immigration, experts have warned.

Living standards have plunged since the General Election, with new figures showing that economic growth per person has shrunk in the past six months.

It delivers another humiliating blow to Sir and Rachel Reeves, who have insisted the Government should be judged on raising living standards.

Official data show that GDP per capita fell by 0.3% between July and September and then by a further 0.1% in October to December.

In the same period, the economy has flatlined while net migration levels continued to surge.

Critics also pointed to the Chancellor’s Halloween Budget for crushing individuals’ personal wealth.

The gloomy assessment came as official data showed the economy unexpectedly grew in the final quarter of last year.

GDP rose by 0.1% between October and December – barely detectable, but significantly better than the 0.1% contraction analysts had pencilled in.

The increase was fuelled by a 0.4% expansion in December, despite predictions of a dire pre-Christmas performance.

Across last year as a whole, growth was 0.9% – almost all in the first half.

The figures emerged amid mounting fears Ms Reeves – who turned 46 on Thursday – could be forced to hike taxes again amid stalling growth, spiking debt interest costs and global trade tensions.

The OBR watchdog is believed to have completely wiped out the £10billion “headroom” the Chancellor built into her sums in October.

Responding to the numbers, Ms Reeves said they were “higher than many expected” but admitted she was “not satisfied”.

But John O’Connell, chief executive of the TaxPayers’ Alliance, said: “The brutal reality for British taxpayers is that despite headline figures showing marginal overall growth, they are experiencing their own personal recession.

“Two consecutive quarters of falling GDP per capita means a sustained and damaging decline in living standards for the average household, with potentially worse to come given much of Rachel Reeves’s catastrophic Budget is yet to come into effect.

“During periods of personal recession there should be a significant policy response including freezes on public sector pay, limits on benefit increases and spending reviews for government departments.”

Ms Reeves sought to blame previous Tory governments for damaging the economy.

“After 14 years of flatlining living standards, we are going further and faster through our Plan for Change to put more money in people’s pockets,” she said.

But Shadow Chancellor Mel Stride said Ms Reeves’s October Budget was “killing growth” and working people and businesses are “already paying for her choices.”

He said: “The Chancellor promised the fastest-growing economy in the G7, but her budget is killing growth.

“Working people and businesses are already paying for her choices with ever-rocketing taxes, hundreds of thousands of job cuts and business confidence plummeting.”

Julian Jessop, economics fellow at the Institute of Economic Affairs, said: “The first official figures for the UK economy in the final quarter of last year may not have been quite as bad as expected, but it says a lot that growth of just 0.1% can be trumpeted as ‘good news’.

“The detail is also worrying.

“Output per head fell again for the second successive quarter, meaning that headline growth is still flattered by the increase in the population.”

He warned the UK has just about skirted “outright recession” and that “fears over jobs are starting to weigh on consumer spending”.

“Growth may recover a little over the course of 2025 as more of the boost from higher public spending kicks in.

“But the economy may be flirting with recession all year – and the private sector is already in one.”

Ms Reeves has vowed to spur on economic growth and make it the Government’s top priority, recently paving the way for a third runway at London’s as part of this ambition.

However, Britain’s independent forecaster, the Office for Budget Responsibility (OBR), is expected to reveal downgrades to growth forecasts in the spring statement on March 26. It has reportedly warned the Chancellor this will wipe out her £10billion “headroom” — spare money against its spending plans.

This will put Ms Reeves under pressure to cut spending or even resort to potential tax rises to keep her on track with fiscal rules, according to economists.