Rachel Reeves humiliated as living standards plunge under Labour after Budget catastrophe
Many people in the UK are struggling financially, and experts say this is partly due to the government’s poor management of the economy and high levels of immigration. This situation is being called a “personal recession” for millions of Britons. Since the last General Election, living standards have dropped significantly.
Recent data shows that the economy has not grown much, and when you look at growth per person, it has actually shrunk over the past six months. This is a big problem for Sir Keir Starmer and Rachel Reeves, who have said that the government should be judged on how well it improves people’s lives.
Official numbers reveal that the economy per person (GDP per capita) fell by 0.3% between July and September 2024, and then dropped another 0.1% from October to December. During this time, the overall economy didn’t grow much, but the number of people moving to the UK (net migration) kept rising. Critics have also blamed the government’s Halloween Budget for hurting people’s personal finances.
Despite these struggles, there was a small piece of good news: the economy grew slightly (by 0.1%) in the last three months of 2024. This was better than expected, as experts had predicted a small decline. The growth was mainly due to a 0.4% increase in December, which was surprising because many thought the economy would perform poorly before Christmas. However, for the entire year, the economy only grew by 0.9%, with most of that growth happening in the first half of the year.
There are growing concerns that Rachel Reeves, who recently turned 46, might have to raise taxes again. This is because the economy isn’t growing much, debt costs are rising, and there are tensions in global trade. The Office for Budget Responsibility (OBR), which monitors government spending, has reportedly wiped out the £10 billion cushion the government had set aside in October. This means the government might have to cut spending or raise taxes to stay on track with its financial plans.
Rachel Reeves responded to the latest economic figures by saying they were better than expected but admitted she wasn’t happy with the situation. She blamed the previous Conservative governments for damaging the economy and said her government is working hard to improve living standards.
However, critics like John O’Connell from the TaxPayers’ Alliance argue that even though the overall economy grew slightly, many people are still facing their own personal financial crises. He said that two quarters of falling GDP per capita mean living standards are declining, and things could get worse as more of Rachel Reeves’ budget plans take effect. He suggested that during such tough times, the government should freeze public sector pay, limit benefit increases, and review spending.
Shadow Chancellor Mel Stride accused Rachel Reeves’ budget of “killing growth” and said working people and businesses are already suffering because of her decisions. He pointed out that taxes are going up, jobs are being cut, and business confidence is falling. Julian Jessop, an economist at the Institute of Economic Affairs, added that while the 0.1% growth might seem like good news, the details are worrying. He noted that output per person has fallen for two quarters in a row, which means the economy is only growing because the population is increasing. He warned that the UK is barely avoiding a full recession and that people are starting to worry about their jobs, which is affecting how much they spend.
Rachel Reeves has promised to focus on growing the economy and making it the government’s top priority. For example, she recently supported plans for a third runway at Heathrow Airport to boost the economy. However, the Office for Budget Responsibility is expected to lower its growth forecasts in March, which could put more pressure on Reeves to cut spending or raise taxes to meet her financial goals. Economists say this could make things even harder for people already struggling with the cost of living.
