Chancellor response to December/Q4 GDP Statistics + Conservative response

Chancellor of the Exchequer Rachel Reeves said:

"For too long, politicians have accepted an economy that has failed working people. I won't.

"After 14 years of flatlining living standards, we are going further and faster through our Plan for Change to put more money in people's pockets.

“That is why we are taking on the blockers to get Britain building again, investing in our roads, rail and energy infrastructure, and removing the barriers that get in the way of businesses who want to expand.”

Conservative response to GDP statistics

Mel Stride MP, Shadow Chancellor of the Exchequer, said:

“The Chancellor promised the fastest growing economy in the G7, but her budget is killing growth.

“Working people and businesses are already paying for her choices with ever rocketing taxes, hundreds of thousands of job cuts and business confidence plummeting.

“It does not need to be this way. Under new leadership, the Conservative Party will continue to oppose Labour's disastrous decisions and stand up for businesses and working people up and down our country.”

ENDS

Notes to Editors:

Labour gone backwards on economic growth:

Jobs are being destroyed: 

• Major economists and employers are warning that Labour's Budget will cost hundreds of thousands of jobs. Deutsche Bank said the Budget is expected to cost ‘just a little over 100,000 jobs' because of an increase to jobs taxes; the Confederation of British Industry (CBI) warned Labour's inheritance tax changes will cost 125,000 jobs and major employers such as Tesco and Sainsbury's are cutting thousands of jobs (The Daily Telegraph, 15 November 2024, link; FBUK, Press Release, 2 December 2024, link; Retail Gazette, 29 January 2025, link; BBC News, 23 January 2025, link).

• The unemployment rate is 4.5 per cent after ticking up on Labour's watch. The latest figures from the Office for National Statistics (ONS) show the unemployment rate has increased by 0.1 percentage point on the month – standing at 4.5 per cent (Office for National Statistics, Labour market overview, UK: January 2025, 21 January 2025, link).

Prices are rising and wages are falling:

• M&S and Curry's, major retailers, are warning that price rises are inevitable following Labour's budget. The Chief Executive of Curry's said price rises are ‘inevitable' on goods because of the budget, whilst Chief Executive of M&S said the firm cannot rule out price rises following the Budget (BBC Radio 4, 15 January 2025, archived; BBC News, 7 November 2024, link).

• The rate of inflation sits above target at 2.5 per cent, meaning greater pressures on family finances and higher prices in the shops. Having inherited inflation bang on the 2.0 per cent target, new figure show that Labour oversaw inflation of 2.5 per cent in December 2024, remaining above target and putting pressure on household finances (ONS, Consumer price inflation, UK: December 2024, 15 January 2025, link).

• The Bank of England and the Office for Budget Responsibility (OBR) predicts wage growth to fall following the Budget. The Bank of England state: ‘Private sector unit wage cost growth is also projected to fall from 3.75 per cent at the end of 2025 to 2.25 per cent at the end of 2026 and to 1.75 per cent at the end of 2027', whilst the OBR warns Labour's Jobs Tax will be passed through in lower wages (Bank of England, Bank of England Monetary Policy Report February 2025, 5 February 2025, link; Office for Budget Responsibility, Economic and Fiscal Outlook, 30 October 2024, link).

Growth is slowing and investment in Britain unattractive:

• Rachel Reeves' budget has resulted in an ‘exodus' of millionaires form the UK. Analysis revealed the UK lost 10,800 millionaires to overseas countries in 2024 which is double the amount lost in 2023. According to research by the Adam Smith Institute each of these millionaires would have paid at least £393,957 in income tax per year – which is equivalent to £4.2 billion in lost tax revenue (The Daily Telegraph, 22 January 2025, link).

• Rain Newton-Smith, CEO of the CBI said the Budget has forced businesses to compromise on growth.NEWTON-SMITH: ‘Tax rises like this must never again be simply done to business. That's the road to unintended consequences. From now on we need an elevated partnership for a higher purpose... Too many businesses are having to compromise on their plans for growth' (CBI, Speech, 25 November 2024, link).

• Business confidence has slumped on the Chancellor's watch. The Bank of England quote in their February report: ‘The British Chambers of Commerce and ICAEW measures of business confidence both declined sharply in 2024 Q4. Similarly, the Lloyds Business Barometer overall business confidence measure ticked down for the fifth month in a row in January' (Bank of England, Bank of England Monetary Policy Report February 2025, 5 February 2025, link).