CP
In a scathing column published this week, Lynn argues that Labour’s Chancellor has squandered the strong economic position she inherited, with spiralling borrowing, soaring public sector costs, and faltering tax revenues pushing Britain into dangerous territory.
“The blunt truth is this,” he writes. “Reeves has completely lost control.”
According to Lynn, the UK borrowed a staggering £151.9 billion over the past 12 months – £20 billion more than the previous year and significantly above the Office for Budget Responsibility’s forecasts. March alone added £16.4 billion to the national debt, the third-highest figure for that month since records began.
He claims the recent economic instability triggered by Donald Trump’s tariffs had masked deeper, structural problems in the UK economy – problems which are now being exposed.
“The borrowing figures are getting relentlessly worse month-by-month,” Lynn writes.
He blames a series of “huge pay settlements” across the public sector for driving up wage bills, along with what he describes as reckless departmental spending – particularly from Ed Miliband’s green energy programmes. Local authorities, he adds, are also feeling the strain, burdened with the cost of rising numbers of asylum seekers.
With the economy now stagnating, Lynn notes that corporation tax and VAT revenues are falling short of expectations as businesses struggle and households tighten their belts.
“Even worse, these are only the ‘provisional’ figures,” he warns. “When the final numbers are tallied up, they will be far worse.”
The situation, he predicts, will deteriorate further in the coming months. A sharp rise in National Insurance costs is expected to hit public sector employers hard, raising the cost of employing 6.1 million government workers. Meanwhile, firms are already making cuts – with Morrisons announcing the closure of 52 cafés and 17 convenience stores as part of wider cost-saving measures.
Lynn also points to new data from the Office for National Statistics showing that the UK borrowed 5.3% of GDP last year – a level he calls “unprecedented” in the absence of any crisis.
“The real figure may well be 6% already, and it will certainly hit that level before the autumn,” he predicts.
While Reeves has unveiled plans for welfare cuts and budget “savings”, Lynn argues these are unlikely to deliver real results.
“So far Reeves has only announced welfare cuts that will prove mostly fictitious, and ‘savings’ that won’t be delivered,” he writes.
With speculation mounting about economic mismanagement and an increasingly volatile fiscal outlook, Matthew Lynn’s column paints a grim picture – and raises serious questions about the Chancellor’s grip on the nation’s finances.
Worth reading in full in the Telegraph here.
This article (‘REEVES HAS LOST CONTROL’: UK HEADING FOR FINANCIAL CRASH, WARNS FINANCIAL EXPERT) was created and published by Conservative Post and is republished here under “Fair Use” with attribution to the author CP
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Reeves’s Incompetence Means the UK is Heading for a Full-Blown Financial Crash, and Nothing Can Stop it Now
WILL JONES
Rachel Reeves’s disastrous mishandling of the thriving economy she inherited from the Tories means the UK is heading for a full-blown financial crash – and nothing can stop it now, says Matthew Lynn in the Telegraph. Here’s an excerpt.
In total, we borrowed a shocking £151.9 billion over the last 12 months, £20 billion more than the previous year, and much more than the Office for Budget Responsibility had forecast. Last month alone, we racked up another £16.4 billion in debt, the third highest March figure since records began.
In reality, the turmoil triggered earlier this month by Trump’s tariffs had obscured how precarious the UK’s financial position had become – and how rapidly the position is now deteriorating. The borrowing figures are getting relentlessly worse month-by-month.
It is not hard to work out why. The huge pay settlements for the public sector agreed by the Government over its first few weeks in office have driven up wage bills and added billions to the public sector payroll. Departments, led by Ed Miliband’s deranged green energy empire, have been spending far more than they were meant to. Local authorities have been left to pick up the welfare bills for the surge in asylum seekers.
Meanwhile, in a stagnant economy, corporation tax revenues have proved disappointing as companies struggle to make any money. VAT is no longer raising the amount expected as struggling households rein back their spending. Even worse, these are only the ‘provisional’ figures. If anyone feels like a bet, here is a certain winner. When the final numbers are tallied up, they will be far worse.
The borrowing numbers are only going to go higher over the course of the summer. The huge rise in National Insurance charges will hit the public sector as hard as any private sector employer; it will add hundreds of millions to the cost of employing the 6.1 million people who work for the Government.
Businesses are already laying off staff and closing units – look at the decision by Morrisons to close 52 cafes and 17 convenience stores as a typical example of what is happening right across the country – to save on costs, and this will hit income tax and VAT revenues.
In reality, this can’t continue for much longer. As the ONS made clear today, the UK last year borrowed 5.3% of GDP, an unprecedented figure at a time when the economy was performing perfectly well (at least until Reeves took over), and there was no immediate crisis to contend with.
The real figure may well be 6% already, and it will certainly hit that level before the autumn. So far Reeves has only announced welfare cuts that will prove mostly fictitious, and “savings’” that won’t be delivered.
“The blunt truth is this,” he concludes: “Reeves has completely lost control.”
Worth reading in full.
*****
Rachel Reeves has revealed her art of the deal: total capitulation
Britain is once again bailing out Europe – this time in exchange for access to our fishing waters
ANNABEL DENHAM
Fresh from gifting the Chagos Islands to Mauritius, handing trades unions powers they wouldn’t have dared put on their Christmas list, and mulling over the idea of slavery reparations, the Government is apparently about to offer major concessions on EU access to our fishing waters. This latest capitulation is self-evidently incoherent: sacrificing our fishing industry in order to have the chance of selling our arms to countries on the continent isn’t a win-win, it’s self-flagellation.
For all the performative fuss over the new, €150 billion EU loans programme – in which more weapons will be bought in the bloc and from allied countries, rather than from the US – several European countries have militaries in an even shabbier state than our own. Italy and Spain lack remotely plausible plans to ramp up defence spending, and probably don’t care: they’re a long way from Kyiv. Our depleted RAF defends Irish airspace. France – which currently spends just 2.1 per cent of GDP on defence against the inadequate 2.3 per cent here in Britain – is desperately attempting to slash its debt burden. Not that you’d detect this from Emmanuel Macron’s latest showboating. The French President has made a pitch for European allies to “buy French” air missile defence systems and fighter jets instead of American weapons.
A cynic might question whether the French are exploiting the need to help Ukraine defend itself against Russia, not least given accusations Macron was “blocking” a €30 billion weapons programme for Ukraine earlier this year. The French are never slow to seize an opportunity, but many will wonder why it is that our own politicians consistently fail to act in Britain’s national interest. Sure, it would be nice to sell more munitions to Lithuania, but let’s not promote Remainer delusions over the livelihoods of fishermen in Peterhead and Fraserburgh.
It certainly seems as though British negotiators have accepted demands from the bloc for a multi-year deal that would freeze fishing quotas, rather than reduce European access further as had been planned for some time. Labour may argue that our defence industry dwarfs our fishing sector, with defence exports in 2023 almost ten times those of fish sales.
But this misses the point. Restoring the powers of self-government after Brexit awarded us the chance to control our waters, handing fishermen more freedom to work and the industry more opportunities for growth. And the EU should want access to Britain’s defence capacity. In any case, has anyone asked what Japan and South Korea gave to gain access to this loan fund? They’re not European, the last time I looked.
“The British are making concessions they need to,” sniffed one EU diplomat this week. “That is positive and shows a maturity that was not there in the Brexit negotiations”. Too many starry-eyed pro-European MPs are likely to ignore this Continental condescension, because they think our interests lie in moving ever-closer to a Brussels elite which disdains us. Fishermen in Grimsby are not on their mental map.
Now is really not the time to be snuggling up to Europe. Britain entered the Trump maelstrom earlier this year in a stronger position than most. By leaving the EU, whose trade policies the US President has repeatedly derided, we escaped his initial 20 per cent tariff.
The Telegraph: continue reading
Featured image: Reddit
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