Financial chaos unleashed by Chancellor Rachel Reeves will cost Britain the wage bill of 350,000 police constables or 300,000 nurses, according to a scathing new analysis.
Shadow Chancellor Mel Stride warns that market turmoil will have pushed up Britain’s borrowing costs by approximately £12 billion – enough to pay for more than one and a half million hip replacements.
His team says the increase in the cost of serving the nation’s debt would be enough to fund the entire judicial system.
Mr Stride said: “The Chancellor’s economic mess means our taxes are being wasted on more and more debt interest. £12 billion could cover Labour’s winter fuel payment cuts for eight and a half years.
“It’s a crisis made in Downing Street – Rachel Reeves needs to stop burying her head in the sand and urgently change course.”
Mr Stride fears that Labour’s decision to hit employers with higher national insurance contributions will lead to higher prices and increased inflation.
He warned: “I think we’re in a very, very difficult economic situation, almost entirely of this Government’s making.”
The Shadow Chancellor is concerned inflation will lead to interest rates staying higher for longer and “people paying more on their mortgages”.
He accuses Ms Reeves of “destroying growth” and says the country “should never, ever have got into this situation in the first place”.
The former Work and Pensions Secretary says the Government could have avoided tax hikes if it had “pursued sensible welfare reform” but he claims it is “simply running away from the whole issue”.
“There are people in their party who really don’t want to touch it,” he said. “They are quite happy with the way it is.
“Well, as a Conservative, I’m sorry, I’m not happy with the way it is. We need a system that is fiscally sustainable.”
Former Tory chief secretary to the Treasury John Glen echoed Mr Stride’s concerns, saying: “The reality is business and the markets do not have confidence in Labour’s plan for growth because there does not appear to be one other than tax more and hope for the best – this is not good enough and the Chancellor needs to listen to wealth creators and change course.”
Former First Secretary of State Damian Green argued the Chancellor had become a liability for the Government, saying: “When a Chancellor’s failures and inadequacies become the central feature of Government, the Prime Minister should be worried, and should act.”
And ex-Defence Secretary Sir Gavin Williamson pushed for a change at the top of the Treasury.
He said: “The Chancellor just hasn’t got a clue about economics as she drags the economy into the danger zone and risks driving up unemployment, inflation and mortgage costs. The PM needs to not allow misplaced loyalty to the Chancellor to jeopardise livelihoods.
“He needs to get shot of her and get someone who is going to deliver jobs and growth, so that they help people not harm them like the current Chancellor.
Ex-Leader of the Commons Penny Mordaunt said Sir Keir Starmer should not escape blame.
She said: “Labours job-destroying, pound-sliding, capital fleeing, investment crushing Budget wasn’t just Reeves’s idea. It was Starmer’s too.
“No one on the government benches has a clue or care about business.”
Ex-Welsh Secretary Alun Cairns said: “Keir Starmer is a brave man to continue to support her but in reality, he is also bereft of ideas. Their tax rises are like a ball and chain around the UK economy.”
A series of influential think tanks have also sounded the alarm about the dangers facing the economy.
Maxwell Marlow of the Adam Smith Institute said it “sits at a precipice”
“The Chancellor must move to quickly to avoid the death-spiral of a simultaneous debt crisis and recession, which can only be avoided by cutting taxes on businesses and deregulating the economy,” he said. “It is now or never – we urge the Chancellor to be brave and slash the red tape strangling our country.”
Daniel Herring of the Centre for Policy Studies warned: “Our analysis shows that, thanks to the minimum wage rise and national insurance contributions changes, businesses will have to pay £2,367 more per year to hire a full-time minimum wage worker. If she wants to grow the economy, she needs to reverse course and implement pro-growth tax reforms.”
Tom Clougherty of the Institute of Economic Affairs said: “The government’s rising borrowing costs and the weakness of the pound are just two indications of the danger we are in. Without meaningful policy change – to grow the private sector and shrink the state – we are on an unsustainable path.”
A Treasury spokesperson defended Ms Reeves’s handling of the economy, saying: “The Chancellor has been clear that economic headwinds are a reminder to go further and faster in our plan to kick-start economic growth, by bringing stability to the public finances after years of instability, unlocking investment and pushing ahead with essential reforms to our economy and public services. The government’s number one mission under our plan for change is to boost economic growth and make people better off.”
