He’s got a lot of work to do, because virtually every policy Chancellor Rachel Reeves has announced since the election has done the opposite. Rather than boosting growth, she’s killing it.
I’ll happily tell the PM what he can do with his growth rule. No, not that. He should rigidly apply it to every measure in her autumn Budget.
Reeves’s decision to slap £25billion of extra national insurance (NI) on employers will do nothing to boost the economy. Quite the reverse.
Immediately afterwards, Deutsche Bank warned it would destroy 100,000 jobs as employers try to cut the cost. That now looks like an underestimate. Official figures show the number of payrolled employees shrank by 47,000 in December, the biggest drop since the pandemic. Vacancies plunged too.
The NI hike doesn’t even come into force until March. It fails Starmer’s growth rule on every measure. It has to go.
As Reeves has belatedly discovered (but we warned all along), making wealthy non-doms liable for UK inheritance tax on worldwide assets won’t boost the economy either.
Instead of sitting around waiting to pay up, they’re off, taking their jobs, spending power and businesses with them.
Will that help growth? Nope.
So will Starmer exercise his shiny new growth veto? Of course he won’t.
There’s plenty more the PM should veto from his Chancellor’s horror Budget. A key one is the decision to slap inheritance tax (IHT) relief on family businesses.
That’s arguably the worst tax raid of all. Family businesses are the lifeblood of a healthy economy. The best ones blossom, creating wealth and jobs.
I’ve spoken to successful firms who’ll have to sell up when the founder dies and that IHT bill lands, at which point they’ll probably be carved up by US private equity.
How does that deliver UK growth? Answer: it doesn’t.
Starmer should apply his veto here too. And while he’s at it, he should veto the IHT charge on farmers.
He should go further.
The Office for Budget Responsibility (OBR) says the Budget as a whole will do nothing for growth.
It forecast the UK economy would expand at the same rate as before, despite Reeves spending a staggering £70 billion extra.
All that tax and spending for nothing.
If Starmer applied his rule as promised, he’d junk the entire Budget.
The price of scrapping the Budget would be the resignation of Rachel Reeves, forced or otherwise. I suspect that’s a price the country would be willing to pay.
The Chancellor is the ultimate growth killer. The moment she started talking down the UK economy after the election, growth flatlined.
GDP grew by a pretty healthy 1.1% in the first six months of last year. In the second half – under Reeves – it’s set to shrink. Recession now looms.
Starmer needs to apply his growth rule with gusto but of course he won’t. Which tells us everything we need to know about yesterday’s pledge.
It’s just another Labour lie. There should be a rule about those as well.
