Andrew Neil has slammed Rachel Reeves’ “disastrous” Budget for placing a strain on the UK economy. Writing in his DailyMail column, the journalist says the chancellor appeared to seem “worried, even fearful” during Prime Minister’s Questions on Wednesday as he believes more tax rises or public spending cuts loom.
Mr Neil says: “Inflation is rising again. Interest and mortgage rates remain stubbornly high. Companies are freezing recruitment and investment. Business confidence is severely dented. A pervasive sense of economic decline is palpable once more.”
Mr Neil went on to explain how he spoke to “the big financial players” who have all said Rachel Reeve’s handling of the economy “could spell the end of Labour”.
He wrote: “Most ominously of all, the bond markets, where the Government goes to borrow the money to pay for the billions in public spending it cannot cover with tax revenues, are signalling enough is enough.
“Investors will not take on any more British sovereign debt without a substantial risk premium in the form of higher yields (the annual interest paid on the money they lend).
“This has the makings of a slow-motion car crash for Reeves.”
This week, the yield on the government’s 10-year bonds hit a record of 4.82%, which is the highest level since the 2008 financial crisis.
With borrowing on the rise, the Chancellor is at risk of maxing out her fiscal headroom. She allocated herself £10billion in the Budget, which allowed her to stay within the rules, yet analysts from Capital Economics predict that Ms Reeves’ is already down to her last £1billion.
“If the economy continues to flatline in the first half of this year, which is likely, then Reeves will have to raise taxes again. So much for ‘fixing the foundations’,” Mr Neil wrote.
Despite the hike in borrowing costs being a worldwide issue due to a sell-off of government bonds, the October Budget has placed the UK in a more vulnerable position.
“Our borrowing costs are rising faster than others – because Labour has made a bad situation worse. It inherited a growing economy which is now in the doldrums. Instead of reinvigorating the private sector – the only reliable route to sustainable growth – it administered a punishment beating,” claimed Mr Neil.