I’m talking about real economists, by the way. Not pretend ones with implausible CVs.
People like Dr Andrew Sentance, independent business economist and former member of the Bank of England’s Monetary Policy Committee.
He’s horrified by the damage Reeves is inflicting warning that: “Lack of confidence in financial markets is a big issue for Rachel Reeves. But she shows no interest in the issue and ploughs on regardless.”
That’s a damning assessment from one who knows.
I wish he was a lone voice but he’s just one of an ever-growing chorus of economists shocked at what Reeves is doing.
It includes Andrew Oswald, professor of economics and behavioural science at Warwick University. He says Reeves now faces a “dawning realisation” that she “cannot make the damn sums work” without income tax and VAT rises.
Alpesh Paleja, the interim deputy chief economist at the Confederation of British Industry, is also on red alert.
Last month, he said the UK is “headed for the worst of all worlds” as firms cut output and hiring in response to Labour’s £40billion Budget tax raid, while inflation climbs.
Worried? It gets worse.
Andrew Goodwin, chief UK economist at Oxford Economics, is warning that “the UK’s debt dynamics are among the worst of the advanced economies”.
The government spent a staggering £102billion servicing the interest on our national debt last year. That’s roughly the same amount we spent on education.
The UK continues to borrow as if we’re in the middle of a war or pandemic. Thanks to our dodgy credit rating, we’re having to pay higher interest rates too.
Yesterday, 10-year gilt yields hit 4.6%. That’s higher than under Calamity Liz Truss in the aftermath of her mini-Budget fiasco, which sent the pound into a spiral while mortgage rates soared.
Truss and her chancellor Kwasi Kwarteng were quickly considered unfit to manage the nation’s finances. So why is Reeves still in situ?
Goodwin said “higher market interest rates” have already eaten some of Labour’s fiscal headroom leaving Reeves with just one option: “To implement further tax hikes.”
The UK desperately needs stronger growth to boost tax revenues and stop our debts from spiralling out of control.
But Reeves has destroyed it by talking down the economy then crushing it with taxes. A host of economists are pointing it out, but she refuses to listen.
Sanjay Raja, Deutsche Bank’s chief UK economist, is also sounding the alarm as the UK economy is already weak and “there’s probably more bad news on the horizon”.
Former Bank of England economist Stuart Cole wraps it up by saying Reeves and PM Keir Starmer “really do only have themselves to blame”.
In an interview with The National, he said they’re pursuing textbook Labour party policies: “Higher taxes, higher spending, big pay rises for unionised labour, an interventionist industrial policy and return to nationalisation, and all wrapped up in the message that things will get better in a few years time.”
Cole added: “Both Reeves and Starmer appear not to have learned the lessons from the past.”
Every generation has to learn afresh that Labour cannot be trusted with the economy. Once again, it’s proving a painful and expensive lesson.
