Rachel Reeves tips UK into death spiral – now Angela Rayner kills it | Personal Finance | Finance
Chancellor Rachel Reeves said she knew how to run an economy. All she’s done is run it into the ground. Growth has stalled, debt has climbed and confidence is draining away. Companies are closing, jobs are disappearing and benefit claims are rising fast. It’s a disaster. But nothing that Angela Rayner can’t make worse.
A few months after the election, I hailed Reeves, Rayner and Ed Miliband the UK’s economic suicide squad, dedicated to bringing Britain to its knees. They inherited an economy that was finally showing some long-awaited green shoots of recovery and throttled it. They have made countless mistakes, but the worst was Reeves’ £26billion hike in employer National Insurance, a straight tax on jobs. It has squeezed profits, deterred hiring and destroyed livelihoods.
Reeves repeatedly claims to have restored stability. Does she think we’re stupid? This isn’t stability. Everything is getting worse, with unemployment rocketing from 4.1% to 5.2% on her watch, and set to climb even higher.
And today, 18 February, the first elements of Rayner’s controversial Employment Rights Bill come into force. It’ll be another hammer blow for the jobs market.
It is billed as stronger worker protection. In reality, it will dump another £5billion of costs onto employers at the worst possible moment. With many firms already on the brink, piling on regulation, unleashing union activists and triggering a wave of employee tribunal claims. This will only destroy more jobs and deter recruitment further. More than a third of companies plan to cut hiring as a direct result of the reforms
This is happening at a time when artificial intelligence threatens to wipe out millions of jobs, with the heaviest burden falling on the young. Entry-level roles are vanishing as automation gathers pace. Youth unemployment has soared to 16.1%, the highest in more than a decade. It’s even higher than in over-regulated Europe.
More than 40% of 18–24-year-olds backed Keir Starmer at the election, while barely 5% voted Conservative. In return, they’ve been slapped in the face. Fail to get a foothold in the labour market at that age and the damage lasts for life.
While much of the economy grinds to a halt, one sector is booming. And this time Reeves can claim the credit. Although she might not want to
In this sector, jobs are abundant. Almost 90,000 new positions have been created under Labour. Wages are rocketing too. So where is this economic wonderland? It’s the public sector. Under Labour, it’s been allowed to let rip, funded by tens of billions in extra borrowing. It’s throwing money around, and wages are rocketing.
Public sector pay is surging too, up an inflation-busting 7.4% in the three months to December. That’s more than double the 3.2% increase in the private sector.
Yet it’s the private sector that pays for everything. It generates the profits and tax revenues that fund public services and welfare. It is also more productive, with output up a third since the turn of the millennium, while public sector productivity has flatlined. Yet it’s the sector that’s being shrunk. At speed.
To make matters worse, welfare claims are surging. Sickness benefit recipients have jumped from 3.5million to 4.2million, with 8.4million people now on some form of welfare. The shrinking private sector pays for that too.
Labour has tipped Britain into a death spiral: a shrinking, overtaxed private sector struggling to support an expanding public payroll and welfare bill. Labour should do yet another swift U-turn. It’s had lots of practice. But it won’t. Instead, Rayner is about to deliver the killer blow.
