Shadow chancellor Rachel Reeves will accuse the government of “gaslighting” the public about the economy, saying ministers’ over-optimistic statements are “out of touch” with Britons still struggling with the cost of living.
The Labour frontbencher will seek to get ahead of the Tories’ response to a raft of economic data this week, arguing that Jeremy Hunt and Rishi Sunak’s likely message of an improving economy is “deluded”.
In a speech in the City of London on Tuesday, she will say voters at the general election have a choice between “five more years of chaos” with the Tories or “stability” with Sir Keir Starmer’s party.
As Labour celebrates a string of victories in regional mayoral contests, local elections and a by-election in Blackpool South, Ms Reeves will say the results showed that people “voted for change”.
Her intervention comes ahead of the Bank of England’s latest interest rates decision on Thursday and figures covering the economy’s performance over the first three months of this year on Friday.
Economists are widely expecting the Bank’s Monetary Policy Committee to keep rates at the current level of 5.25 per cent, despite political pressure from the government to start lowering rates before the election.
Ministers may be more cheered by the Office for National Statistics’ quarterly GDP data, which is expected to show the UK has exited its recession.
Ms Reeves will tell business leaders: “By the time of the next election, we can, and should, expect interest rates to be cut, Britain to be out of recession and inflation to have returned to the Bank of England’s target.”
“Indeed, these things could happen this month. I already know what the chancellor will say in response to one or all these events happening. He has been saying it for months now: ‘The economy is turning a corner,’ ‘our plan is working,’ ‘stick with us.’ I want to take those arguments head on because they do not speak to the economic reality.”
She will continue: “During the local elections I travelled across the country. I spoke to hundreds of people. I listened to their stories. And when they hear Government ministers telling them that they have never had it so good, that they should look out for the ‘feelgood factor,’ all they hear is a Government that is deluded and completely out of touch with the realities on the ground.”
“The Conservatives are gaslighting the British public.”
The shadow chancellor will describe the Conservatives’ record on the economy as having “crashed the car and left it by the side of the road”, and say that all they offer is “more of the same: low growth, higher taxes, and public services in deep decline”.
Labour will fight the election, expected later this year, on the economy, Ms Reeves will say, vowing to put forward her party’s plan to boost growth and “raise living standards, resource public services, and let Britain compete in the world once again”.
She will point to plans to establish a national wealth fund to deliver private and public investment, reform planning laws to build 1.5 million homes, and create 650,000 jobs in the UK’s industrial heartlands.
The shadow chancellor, who has been careful to balance caution with a big ambitions for the economy, will say: “I know – warm words are not enough. I do not underestimate the challenges we face.”
But, she will say, the constraints holding back Britain’s potential “are not immutable forces” and can be overcome with “vision, courage, and responsible government”.
While the Conservative Party is historically more trusted on the economy and stewardship of public finances, polls suggest Labour’s approach of stressing the need for stability and sticking rigidly within balanced tax and spending rules is working.
The party has heightened its attacks on what it calls “chaos and decline” under the Tories by launching a video series on a website dubbed “Conflix”.
Conservative Party chairman Richard Holden said: “The personnel may change but the Labour Party hasn’t. Rachel Reeves still hero-worships Gordon Brown, who sold off our gold reserves and whose hubris took Britain to the brink of financial collapse.”
“Labour have no plan and would take us back to square one with higher taxes, higher unemployment, an illegal amnesty on immigration and a plot to betray pensioners, just like Gordon Brown did.”
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