Rachel Reeves only has herself to blame for this recession

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a day ago

Companies were hammered by a steep rise in employment taxes. Business rates went up sharply as reliefs were wound down. The living wage was pushed up, and stamp duty breaks were slashed.
Against that dismal backdrop, it is probably a miracle that the GDP figures for April published today recorded only a 0.3 per cent month-on-month decline in output.
The Chancellor Rachel Reeves will shamelessly try to blame that on the tariff war started by president Trump. But the blunt truth is this. The unfolding recession was entirely predictable – and she has only herself to blame.
April was always going to be a tough month for anyone struggling to run a business in the UK. Employer National Insurance went up, and we saw the initial impact of that in the annual loss of 274,000 jobs in the employment data reported earlier this week.
Likewise, one of the biggest rises in the living wage was imposed, and we saw the effect of that in declining hours worked in sectors such as shops and restaurants, which need lots of modestly paid staff. Business rates went up sharply, as reliefs were wound down, with many pubs facing an extra £12,000 or more in the amount that they have to pay to the local council, and closures are now running at 100 a month. Stamp duty went up as reliefs were phased out, and we have already seen the consequences of that in the 0.4 per cent decline in home prices reported by Halifax last week.
In the background, industrial electricity prices have remained by far the highest in the world, forcing factories to close their doors. One by one Reeves has taken the major sectors of the British economy – property, hospitality, retailing and manufacturing – and whacked them with huge extra charges.
Sure, it didn't help that the US imposed tariffs on the UK along with its other major trading partners. And yet, in reality, the sharp fall in output witnessed in April was entirely self-imposed.
It took an extraordinary level of incompetence, and a breath-taking level of arrogance, to sequence such a punishing round of tax increases so that they all kicked in at the same time. It is not as if Reeves was not warned of the devastating impact of her tax rises on businesses. The M&S boss Stuart Machin called for the NI rise to be phased in back in February but was ignored. The British Beer and Pub Association called for help with business rates, but no one at the Treasury paid any attention. Rightmove called for stamp duty relief to be extended, and so did many other estate agents, but the Government didn't listen. The list goes on and on.
Time and time again, businesses have told the Chancellor that her policies are killing their trade, only to be ignored. As it has turned out, however, they were completely right, and today's GDP figures have proved that.
It is going to get much worse over the next few months. We have only seen the start of the fall in employment after the NI rise. After all, if your wage bill is out of control, it takes time to slim staff numbers. There are procedures to follow before you dismiss someone, and most small companies will rely on natural wastage, and simply not replace people, instead of risking the cost of an employment tribunal.
Stamp duty has only just gone up, and it will take buyers a while to figure out they can no longer afford to move. Meanwhile, retail sales are falling again, and the inevitability of more tax rises on business in the autumn is deterring investment.
Reeves chose to ignore the warnings that her tax raids would crash the economy. She will now have to reap the consequences of those decisions – and unfortunately so will the rest of us.
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