The former chairman of NatWest Bank has launched a broadside against Rachel Reeves, claiming it appears as though she is doing everything she can to prevent economic growth.
Economist Sir Howard Davies’ criticism of the chancellor comes less than two weeks ahead of a crucial budget which many believe could make or break the government.
While Keir Starmer and Ms Reeves came into office claiming that economic growth was their number one mission, the economy has stagnated, and new figures published on Thursday show UK economic growth slowed to 0.1 per cent for the past three months.
Sir Howard blamed the policies she has brought in, including increasing national insurance contributions on employers and new employment rights, for the dire state of Britain’s economy.
He said: “I would say that the way the government have been behaving in recent months is such that if they were trying to slow the economy down, I can’t think of anything else I would do.
“Because you demonstrate first of all that you’ve got trouble at the top of the government, you then conduct a series of remarkable leaks suggesting that you’re going to tax property, you’re going to tax wealth, you’re going to tax gambling, you’re going to tax banks. You’re now going to tax even bikes for goodness sake!
“All of that is a sort of cumulative weighing down and creation of uncertainty.”
He added: “In addition, you have legislation which makes it more expensive to hire people, and you carry out a policy of public spending whereby public sector wages are going up by 6.6 per cent a year, and private sector by 4.2, and that is stopping the Bank of England from reducing interest rates, which would help as well. So there’s a whole series of things which are not appropriate.”
Shadow chancellor Mel Stride said briefings against the health secretary Wes Streeting amid fears for the PM’s position was “already having an impact on the market”.
He told Times Radio: “It does take a certain level of incompetence to actually become a prime minister who’s actually now fearful for his own position.”
He added: “I think what’s happening is already having an impact on the market” as he accused Sir Keir of projecting “chaos” at a time where economic stability is what is required.
“You can’t really project chaos and expect to have a positive, solid, stable economic future for our country,” he added.
In response to the GDP figures Ms Reeves said the UK had the fastest-growing economy in the G7 group of advanced nations in the first half of the year, but added that there was “more to do to build an economy that works for working people”.
