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Reeves waltzed into power convinced of her own brilliance. But instead of saving the country from the Tories, she’s driven it deeper into the mire.
I’m racking my brains to think of one successful policy “wrecker” Reeves has pursued. I’m stumped.
Reeves is now promising anybody who’ll listen that her economic plan will unleash investment, drive confidence and propel Britain forward.
Next week comes the reckoning.
On Thursday, Bank of England (BoE) interest rate setters hold their first meeting of the year.
The BoE’s monetary policy committee (MPC) is expected to cut base rates from 4.75% to 4.5%.
While that’s good news, the BoE will simultaneously deliver a killer blow to Reeves. Its Monetary Policy Report will tell us where the economy is heading on her watch.
The prospect must be giving Reeves nightmares. There’ll be no hiding place after Thursday.
BoE number crunchers are set to confirm what the rest of us already know – our hapless Chancellor is a growth killer.
In July she took over an economy that was going “gangbusters”, according to the Office for National Statistics. Then shot it dead.
Growth flatlined from the moment she entered No 11.
Some hoped GDP would pick up in 2025 as Reeves unleashed a £70billion spending splurge. But our hopeless Chancellor can’t even buy growth.
In the autumn, the BoE forecast GDP would grow by a meagre 1.5% across 2025. On Thursday, it’s expected to slash that to just 1%.
That’s not just a slap on the wrist for Reeves. It’s a guilty verdict.
And it will get worse.
The Office for Budget Responsibility is also revising its GDP forecasts and guess what? Leaked figures suggest they’ll be downgraded too!
This will leave the UK finances on a knife edge. Reeves’s borrowing splurge will add another £10billion to the annual cost of servicing our national debt.
This left her with almost no fiscal headroom. And as growth shrinks, she’ll go over budget.
That means two things. First, more tax hikes. Probably in March when she could increase up to seven different taxes.
Second, more brutal spending cuts as she looks to balance the books.
This will be the only way to stave off fiscal meltdown.
The only sliver of good news is that the MPC will have to accelerate interest rate hikes in a bid to lift growth. But even this is an admission of failure. Basically, the BoE is bailing her out.
The Chancellor’s crisis is entirely self-inflicted. Next week will be Judgement Day for Rachel Reeves. Unfortunately, taxpayers will be the ones punished.
