Rachel Reeves is wrong to blame Brexit for her economic woes. They are all of her own making. She spends, taxes and borrows too much. Higher taxes drive up prices, undermine confidence and destroy jobs. They become self defeating, leaving her short of money and borrowing to excess.
She is in danger of entering a doom loop. Putting up taxes again would drive prices up and jobs and investment down. She could end up borrowing more with higher prices and a stalled economy. A groundhog budget like last year would be a disaster.
She wants us to believe our prices are going up too much thanks to Brexit. Funny that, five years after Brexit when they stayed low for the first two years after we left. She needs to remember her own exchange of letters with the Governor of the Bank of England. They agreed this September that inflation was too high largely thanks to recent government actions.
The government put up water bills a lot to increase spending on new and bigger pipes. They increased the managed price of energy. Mr Miliband’s passion for more renewables and high fossil fuel taxes gives us the dearest energy of the advanced countries. The Chancellor’s increases in National Insurance and business taxes forced shops, restaurants and hotels amongst others to put up prices to pay the tax. The plastics tax increased the costs of food packaging. Most Council tax bills went up by 5%, well above inflation.
Rachel Reeves promised in her letter to get government to cost us less, recognising it had pushed up inflation through a series of decisions that hit consumers. She has said this next budget needs to help get prices down, but will it? She has to get so much better at controlling the surging costs of government. She needs to stop sending us the bill for public sector excess costs. Meanwhile she racks up huge losses on bond sales agreed with the Bank of England and is apparently helpless as the cost of illegal migration spins out of control.
The Chancellor also blames Brexit for poor productivity. She is being told she needs to put taxes up by the OBR because we are producing less per person than they thought. Lower productivity means more cost to produce goods and services and less tax revenue from selling the lower output. She wrongly thinks if we were back in the EU our productivity growth would miraculously rise through trade competition. Funny it didn’t do that when we were in. Growth in productivity fell over our period of membership.
Worse still for her argument, the big collapse in productivity has been in the public sector. This is all domestic activity completely unrelated to trade with the EU. Private sector productivity growth has reduced as the government’s high energy prices close down what were highly productive factories making energy intensive products, and accelerate closure of the very productive oil and gas industry.
Closer links with the EU will make both problems worse. The EU wants to stop us buying cheaper food imports from the rest of the world and buy more expensive EU food instead. Their carbon border tax will make things dearer, and their carbon tax helps close UK factories. We did not get rich like the US by being in the EU. The EU average GDP per head is just half the US level. Closer links to the EU would make us worse off.
Rachel Reeves should be celebrating Brexit. Her black hole would be £25 bn bigger if we were still in, paying membership fees and sending them our customs receipts and plastic tax money. Who would want to pay all the extra tax it would cost us to rejoin?
October 30, 2025
Not oly that , Starmer’s trade deal with Turkey ( and earlier ones with India ,Norway etc ) would have been impossible without Brexit
October 30, 2025
The India trade deal was rather duff for the UK undercutting UK wages with different NI rules. I suspect the others were too. Two tier and Lammy are not noted for their great negotiation skills see Chagos, one thousand in then one out and one in again, payments to France for their non beach policing…
October 30, 2025
Indeed but I would amend your opening sentences to:-
Rachel Reeves is wrong to blame Brexit for her economic woes. They are all of her own making. She spends (appallingly inefficiently and on mad things), taxes, regulates and borrows too much. Higher taxes drive up prices, undermine confidence, push up inflation and interest rates and destroys grwoth & jobs. They become self defeating, leaving her short of money and borrowing to excess.
She is already a doom loop!
October 30, 2025
Lammy at his typical race baiting seft in the Independent.
Mr Lammy said: “Most people want to live in a tolerant society and are disgusted by the racist views of the Reform MP Sarah Pochin, who said there were too many Black and Asian faces in adverts.
She actually said it was not representative, clearly just a statement of truth. Nothing racist about her or reform!
What clearly is racist is this government’s two tier policing & justice system and the policy of DEI with so many second rate “diversity” appointments (like Lammy perhaps) and blatant discrimination against white males especially. Even for RAF pilots.
October 30, 2025
Lammy also said “the spirit of civil rights leaders like Martin Luther King Jr “is at the heart of the Britain I know and love” but King Jr sensibly wanted “people to be judged by the “content of their character” rather than by the “color of their skin”
Lammy and Two Tier Kier clearly want the complete reverse of this, a vile and divisive race baiting agenda with active discrimination against white males especially and loads of diversity over merit appointments.
October 30, 2025
So Ms doom loop Reeves has broken the law by letting her house without a licence. It is of course an outrage that some councils are allowed to demand rip off licences just to let your own house, another parasitic job creating and back door tax system. So when you buy a house it is not really yours at all is it?
October 30, 2025
LL, someone needs to challenge the right of council officials to levy fees and impose licence conditions.
I don’t recall any legislation granting local authorities such sweeping powers?
October 30, 2025
Our economic growth is projected to be a puny 1.2% this year and 1.4% in 2026. It has been downtrending since the high of 4.3% in 2000. Downtrending for 20 years before Brexit has nothing to do with Brexit. It is due to something else and that is mass legal immigration diluting our labour productivity which directly reduces GDP growth. This is especially acute in the public sector.
Reeves and Starmer can try for better trade agreements, more Chinese FDI and another Gatwick runway and all the other periphery but it is not going to make any material difference to GDP growth until the root problem is resolved which is to get Britain’s labour productivity back to its long-term average. That gets done by capping net migration at its long-term average of about 50k per year (with some flexibility for international students). Productivity will then increase and so will GDP and a virtuous circle will be formed causing more productivity growth and more GDP growth. We will then grow like we used to.
October 30, 2025
@Paul Freedman – ah, but taxes are up, cost are up, borrowing is up, civil service hires are up. There are some in this administration that then point to growth in those areas as growth in GDP
October 30, 2025
The effect of all that is captured in the numerator of the labour productivity ratio Ian.
Labour productivity = output / worker (ie GDP / worker). You can improve labour productivity by either increasing the numerator or decreasing the denominator (or both). Either way you get a higher value. I am referring to lowering the denominator (number of workers) to restore labour productivity to its long-term average as there are too many workers here. Every department, company, industry, sector in the UK should at least be operating at their long-term average labour productivity levels. That has slipped since 2000 though as the growth in number of workers (denominator) has been increasing at a faster rate than GDP has thus the GDP / worker ratio has dropped since 2000. In other words all the ‘excess’ legal immigrants we have employed over the last 25 years have not sustained the UK’s long-term average labour productivity levels. That’s not necessarily because they are lazy but because there are too many of them. The excess amount is what needs to addressed as it is an ongoing problem especially in the public sector. My suggestion is to stop the problem persisting by capping future net migration at its long-term average of about 50k per year.
You rightly refer to the numerator and of course that can be improved too in particular with increased consumer spending (through tax cuts), increased corporate investment and increased trade. I would argue we need to fix the denominator immediately but of course we need to improve the numerator too.
October 30, 2025
The French economy is in a worse state than ours. The German economy is in free-fall, thanks to the Eco lunacy. The EU is desperate to outsource a large proportion of their* youth unemployment problem to us.
* This will include many violent “new Europeans” which Merkel invited to flood into the EU.
Quite why the Establishment cohort thinks remaining or rejoining the collapsing EU will rescue our economy is beyond me. But then it isn’t about the economy and never was.
October 30, 2025
It provides someone else to blame for the inevitable. It does not rescue.
October 30, 2025
And then there is the Local Council claiming that their staff can now do in four days what used to take them five. The logical conclusion is that the staff weren’t working as hard as they might or more likely, that they were taking a lot of sick days off. The logical outcome would be to return to five day working and reduce headcount (and payroll) by 20%.
October 30, 2025
In some countries, anyone causing so much hardship and loss to so many other citizens would be restrained and punished.
October 30, 2025
Did I miss the bit where you advise her to reverse Net Zero to enable the county to focus on wealth creation Sir John?
Reply Done that in many other articles and 2 short books!
October 30, 2025
I’m not sure how to address this situation, is it ideology, is it greed, pure incompetence or some other factors or a combination. Whatever the reason we’re being driven towards the IMF. I’m old enough to remember the 70s, putting my daughter to bed by candlelight, when Labour policies and union strength brought us to our knees and the IMF. Lesson not learnt.
October 30, 2025
You state what is bleedin’ obvious to most of us so why can’t Rachel Reeves see it? People not recruited and in employment are not paying into HM Treasury. Employers dare not employ more and are actually reducing the payroll by laying workers off because of costs and new rules of providing employment. Head hunting has virtually stopped for the first time in recorded history.
October 30, 2025
Afraid it is all down to government political incompetence for the last 30 years that the UK is slowly, very slowly falling behind the growing economies of the World, in an effort to become so called, more inclusive and socialist.
Too many people coming into the Country with nothing to offer, too many going out who have been successful, too much government expenditure and interference with too many Benefits, laws, regulations, and taxes, with the end desire to redistribute other peoples wealth.
Whilst it our demise has happened very slowly, it is now becoming crystal clear to most people !
We need a complete re-set if we are to ever get back on track.
October 30, 2025
“She [Rachel Reeves, the Chancellor] is in danger of entering a doom loop.”
The Chancellor knows this, for socialism depends upon making and keeping people poor and the way to obtain the permanent control we see in socialist countries such as China and Russia is through impoverishment and socially destabilising the country. We are certainly in a doom loop with the Net Zero Strategy as the chosen zero CO2 emitting energy is renewable rather than nuclear. The EROEI (Energy Return on Energy Invested) for all renewables is below 4, the minimum needed for our civilised society to function. If renewables were forced to re-produce themselves they couldn’t do it. They’re unsustainable. The only reason renewables appear to work at all is firstly because we’re purchasing the infrastructure from coal-powered China and secondly because we still have sufficient hydrocarbons and nuclear to keep our energy flowing. The more “green” jobs Net Zero creates gathering energy, the poorer we all become. Just as banning agricultural machinery and fertilisers would create millions of “green” jobs working in the fields but certainly wouldn’t make us wealthier. See David Turver’s Substack Eigen Values ‘Why EROEI matters’.
October 30, 2025
@Original Richard +1
October 30, 2025
We have a government of liars and incompetents from the PM down.
The PM has lied about the Chagos deal, the China spy scandal, and other matters, including the relationship with the EU. Rachel Reeves is lying about Brexit being the problem, even though she knows it is not true. Her next budget will be another disaster, because she is utterly incompetent. Ed Miliband is lying about Wind and Solar being a better, cheaper energy source for the UK, and agreeing to subsidies that will make our energy dearer for the next twenty years. David Lammy is an embarrassment to the UK, and if Sarah Pochin is a racist, so is he.
They all lie about legal and illegal immigration. Yvonne Cooper was an absolute drip of a Home Secretary and will be no better as Foreign Secretary. We have a government of pygmies when we needed a government of giants!
October 30, 2025
@Keith from Leeds +1
…And the Parliament the majority of its 650 MPs that have a duty to hold the Execrative to account? By sitting on their hands, doing and saying nothing they are accepting the joint responsibilities of failure. In fact the are denigrating the standing of MPs generally
October 30, 2025
Sir John
If just 10% of the media rumour mill was found to be the correct in its projections as to the content of the Budget expected to be written by Torsten Bell and approved by 2TK to then be presented by what is essential the girl from complaints. (She has a background of having to read the scripts of others.) Then we are in for more calamity. Repeating what is said by many, a Nations economy is based on the money swirling around that economy at every level – it is self feeding. The economy grows from having money. Remove money from the economy and things die off, decline, fade away. Tax is small instances of fixed costs, that should do nothing other than aid and secure a framework, the infrastructure for others to produce, the bit that cant be done effectively by others. There is very little that cant be done, better, more efficiently and effectively in the broader market place. Taxes, remove the seed corn that causes an economy to happen. Its naive to have EU thinking that tax is a deployable weapon to manipulate thinking that doesn’t comply with the Socialist Dream. That is why the World free from the Socialist Politburo Dream is racing away, enjoying freedoms and wealth