“Reeves tried to tell us this week that she’s doing a good job. But pretty much everything she said about the economy was misleading.”
The Conservative Party’s shadow chancellor, Mel Stride, has launched a scathing critique of UK Chancellor Rachel Reeves, arguing that a series of claims she made about the economy do not stand up to scrutiny when compared with official forecasts and economic data.
In a detailed thread on X, Stride accused Reeves of relying on what he described as “smoke and mirrors”, citing figures from the Office for Budget Responsibility (OBR) and analysis from the Resolution Foundation to argue that the government’s optimistic narrative is deeply misleading.
He suggested that once the underlying numbers are examined, the picture painted by the chancellor looks far less favourable.
Household income forecasts
Stride first challenged Reeves’ claim that households will be more than £1,000 a year better off by the next general election, a figure based on OBR forecasts for real household disposable income between 2024 and 2029.
According to Stride, the figures show that the vast majority of the projected improvement occurs immediately after the 2024 election, before Labour had implemented its economic policies. He argued that the forecast thereafter shows only weak income growth.
Citing OBR commentary, Stride said that while incomes had been growing strongly alongside falling inflation before Labour took office, forecasts now suggest households will be squeezed by rising inflation, higher taxes and slower wage growth.
Living standards concerns
Stride also pointed to analysis from the Resolution Foundation, which has warned that, excluding the pandemic period, the current parliament could see the weakest growth in living standards on record.
He noted that much of the income growth that does appear in the forecasts is expected to come from increased welfare spending rather than stronger pay.
Growth figures
Stride also disputed Reeves’ claim that the government had beaten growth forecasts last year.
He said the forecast at the start of the year was around 2%, yet the final figure came in at just 1.3%. He added that when measured per person, the economy has contracted over the last two quarters.
According to Stride, that means GDP per capita has fallen, suggesting that despite headline growth figures, the average Briton is effectively becoming poorer.
Inflation and borrowing
Stride’s thread also attacked Reeves’ claims about inflation and government borrowing.
He argued that inflation rose after Labour took office, blaming higher taxes and increased borrowing, and noted that the UK recorded the highest inflation rate among the G7 economies last year.
On borrowing, he said government finances had deteriorated significantly compared with earlier projections. Borrowing for the current year, he said, had been expected to reach £77 billion but instead stood at £133 billion.
Stride argued that this represents more than a quarter of a trillion pounds in additional borrowing across the parliament compared with earlier expectations.
Unemployment forecasts
Stride also criticised Reeves’ comments on unemployment, after she said joblessness would peak later this year and then fall across the forecast period.
He said unemployment has already risen since Labour took power and noted that the OBR has revised its expectations upward for how high it may climb.
The forecasts, he said, now point to unemployment rising above pandemic era levels before it begins to decline.
Political clash over the economic narrative
Stride concluded by arguing that the economic story presented by the chancellor bears little resemblance to the underlying figures.
In his view, the forecasts show inflation, borrowing and unemployment moving in the wrong direction since Labour took office, while growth and living standards remain weak.
The Treasury has previously defended the government’s record, pointing to falling headline inflation and projected increases in household incomes as evidence that its economic plan is working.
However, Stride’s intervention underscores the intensifying political battle over the interpretation of official forecasts, with both sides seeking to use the same economic data to support sharply different narratives about the state of the UK economy.
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