A new graph has thrown Rachel Reeves’ claims on the economy into question as it reveals inflation has risen since Labour came to power.
The Chancellor today said inflation has been “too slow to come down”, as she delivered a speech ahead of the November 26 Budget.
She said: “The continual threat of tariffs has dragged on global confidence, deterring business investment and dampening growth.
“Inflation has been too slow to come down, as supply chains continue to be volatile, meaning the costs of everyday essentials remain too high.
“And the cost of government borrowing has increased around the world, a shift that Britain, with our high levels of debt left by the previous government, has been particularly exposed to.”
However, a new graph suggests while inflation initially fell ahead of last year’s General Election, it has risen since, casting doubt on the Chancellor’s claims.
Economist Julian Jessop told GB News: “There is no real doubt that Rachel Reeves’ own policies have added to UK inflation, mainly via the pass-through of higher labour costs.
“It is widely accepted that the increases in employers National Insurance contributions and in regulated prices, including energy bills and minimum wages, have kept inflation higher for longer.
A new graph suggests inflation has risen since the General Election
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“That is the view of almost all independent commentators, including the Bank of England and the International Monetary Fund (IMF).
“Indeed, higher labour costs alone probably account for more than half of the gap that has opened up between inflation in the UK and in the euro area.
“Altogether, this suggests that UK inflation is at least one percentage point higher than it would otherwise have been as a result of Government policies.”
Ms Reeves today warned millions of Britons they could face higher taxes because “we will all have to contribute” to securing the country’s economic future.
Rachel Reeves delivered a speech today ahead of the November 26 Budget
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The Chancellor would not commit to maintaining Labour’s manifesto promises not to raise income tax, national insurance or VAT.
She blamed global problems including the tariff war triggered by Donald Trump and domestic issues including the budget watchdog’s expected downgrade of economic productivity for the “hard choices” she will make.
However, Ms Reeves insisted her Budget would focus on cutting NHS waiting lists, address the cost-of-living crisis and reduce the burden of interest on government debt.
Economists have estimated that Ms Reeves will have to find billions to plug a black hole caused by U-turns on welfare cuts, promises to increase defence spending and increased debt interest costs.
The Chancellor also wants to give herself a bigger buffer than the almost £10billion she previously had against her rule of balancing day-to-day spending against tax receipts in 2029-30.
The Resolution Foundation think tank has estimated she will need to raise taxes by £21billion to £26billion to remain within her target and increase the “headroom” to absorb further shocks.
That has led to the expectation she will be forced to increase one of the big revenue-raising taxes, which was previously ruled out in the manifesto.
Ms Reeves did not use her speech to confirm hikes to taxes but she made clear that she would not rely on austerity measures or increased borrowing to balance the books.
Rachel Reeves did not use her speech to confirm hikes to taxes
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If Ms Reeves does rip up the manifesto and increase the basic rate of income tax, she would be the first Chancellor to do so for 50 years.
Conservative Party leader Kemi Badenoch said Ms Reeves had offered a “laundry list of excuses”.
Mrs Badenoch added: “She blamed everybody else for her own choices, her own decisions, her own failures.”
Reform UK’s deputy leader Richard Tice also said: “Rachel Reeves has today confirmed what we all knew – she’s going to hammer working people with even more tax rises.
“Instead of cutting waste and spending, deregulating and optimising for growth, we are just getting more of the same.”
Meanwhile, Liberal Democrat deputy leader, Daisy Cooper, described the Chancellor’s speech as “pointless”.