Rachel Reeves was last night accused of ‘going into hiding’ after the economy ground to a halt under the weight of her tax hikes.
In another gloomy day for Labour, official figures showed output was flat in July, prompting warnings from business leaders that the government ‘cannot tax its way to growth’.
The grim figures were met with stony silence from the chancellor, however, although a Treasury spokesman was forced to admit the economy ‘does feel stalled’.
Ms Reeves’ failure to address the situation – ahead of what looks set to be a brutal budget with further tax rises in November – has sparked outrage.
Shadow chancellor Sir Mel Stride said: “No wonder the chancellor has been hiding while the economy has been destroyed on his watch.”
Until now, Ms Reeves has regularly commented on economic figures, and last month praised the ‘strong start to the year’ after the national statistics office reported growth of 0.4 per cent in June.
Rachel Reeves (pictured) was last night accused of ‘going into hiding’ after the economy ground to a halt under the weight of her tax rises.
But Treasury sources said yesterday he would not comment on the latest figures. The change of tack comes amid turmoil in Downing Street as the government reels from the departures of Angela Rayner and Peter Mandelson.
There are also suggestions that Sir Keir Starmer has sidelined Ms. Reeves by appointing his own economic team. Yesterday’s ONS figures showed the economy flatlined in July. Over the three-month period, output crept up 0.2 percent.
Ms Reeves raised taxes by £40 billion in her first budget in October last year and it is feared she will need to find anywhere between £20 billion and £50 billion this time around.
Concerns over the state of the public finances – and inflation at the highest level in the G7 – have sent the UK government borrowing costs to 27-year highs on global bond markets in recent weeks.
Barclays bosses yesterday urged Ms Reeves to cut spending rather than raise taxes to balance the books.
“We need to rein in spending at the government level,” said bank chief executive CS Venkatakrishnan.
Ben Jones, chief economist at the CBI Business Lobby Group, said the economy was ‘stuck in the shade’.
Anna Leach, chief economist at the Institute of Directors, said: ‘Growth plans have been hit by a sharp rise in the cost of employment, and fears of more tax rises to fill the latest black hole in the public finances.’
Sir Mel added: ‘Raising taxes again will not fix Labour’s mismanagement of the economy.’
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