Chancellor Rachel Reeves came under fire last night after her ominous claims about the Tories' economic legacy fell apart.
Latest figures from the UK's robust recovery show growth this year is the fastest on record G7 group of advanced nations, while inflation remains moderate and unemployment is falling.
Yet, in what is seen as a public preparation for tax rises, Ms Reeves insists Labour's economic legacy is the worst since the World War II.
Critics expressed disbelief at the claim, which comes as the finance minister has handed out huge pay rises to public sector workers.
One expert said Ms Reeves' comments were “absolutely wrong”, while another described the latest figures as “another great quarter” for the UK.
Chancellor of the Exchequer Rachel Reeves came under fire last night after making ominous claims about the Tories' economic legacy.
The Office for National Statistics reported that GDP grew by an estimated 0.6 percent in the second quarter of this year, following a 0.7 percent increase between January and March.
Former Tory chancellor Jeremy Hunt said his successor's doom talk 'will not resonate with the public'
Former Tory Chancellor Jeremy Hunt said his successor's doom-mongering “will not resonate with the public” and added that the latest figures “prove once again that Labour has inherited a growing and resilient economy”.
Tory leadership candidates have queued up to criticise the new Chancellor of the Exchequer as she prepares to raise taxes in her first Budget. Dame Priti Patel said: 'Reeves spent the election lying to the British public about her planned tax rises for hard-working British families and is now simply trying to shift the blame.'
Tom Tugendhat added: 'Under a Conservative government we had economic growth. Under Labour the only growth we're going to see is the pile of money in the pockets of the union barons.'
The Office for National Statistics reported yesterday that gross domestic product (GDP) grew by 0.6 percent in the second quarter of the year, after growth of 0.7 percent in the first quarter.
That works out to 1.3 percent for the first half of the year, meaning that British growth in the last six months of the Conservative government was higher than that of its G7 rivals, including the United States.
Inflation is running at 2.2 percent and unemployment has fallen to 4.2 percent from 4.4 percent. And a painful period for mortgage borrowers is beginning to ease as markets bet the Bank of England’s rate cut this month will be followed by two more this year.
Yet Ms Reeves continues to predict tax rises. She says: 'The new government is under no illusions about the scale of the challenge we face after more than a decade of low economic growth and a £22 billion black hole in the public finances.'
Darren Jones, the Chancellor of the Exchequer, added: “What we inherited from the Conservatives was the worst financial legacy since the Second World War.” But Kallum Pickering, chief economist at City estate agents Peel Hunt, said: “It is patently wrong to say the UK economy is in bad shape.”
Banks, consumer credit and mortgages are all healthy, he said. And while government finances are in bad shape, that is not because of “bad management of the economy,” Mr. Pickering added, but because of the pandemic and the rise in energy prices caused by Russia’s invasion of Ukraine.
In what is seen as preparing the public for tax rises, Ms Reeves insists Labour's economic legacy is the worst since World War Two
“Now that the unusual shocks are over, the economy is growing because the private sector is fundamentally in good shape,” he said.
The deficit Labour inherits – the amount a government borrows each year as a percentage of GDP – is 4.5 per cent. That is much smaller than the 10.3 per cent deficit David Cameron and George Osborne faced in 2010.
Unemployment at the end of Rishi Sunak's term stood at 4.2 per cent, about half the level in 2010, when it stood at 7.9 per cent.
Ben Zaranko of the Institute for Fiscal Studies said: “It is clear that the economic legacy is not the worst since World War II: the economy is growing, inflation is back near target levels and unemployment is low.”
Ellie Henderson, economist at Investec, said: “The sun appears to be breaking through the dark clouds in the UK.” KPMG's Yael Selfin described it as “another great quarter” for the UK.
Mr Tugendhat said: 'The fact that Labour managed to cough up a pot of money for union leaders, while at the same time claiming there was a £22 billion hole in the national finances, was a clear sign that they had a plan all along: higher taxes, more spending and no investment in the future.'
Mel Stride, another Tory leadership candidate, added: 'Wage restraint was a key factor in the Conservatives' success in bringing down inflation, which means the Bank can now start cutting interest rates. If Labour's giveaways mean interest rates stay high for longer, homeowners will pay the price.'