Flat GDP, IMF gloom and Tory tax bung a gift to Labour spinners ahead of locals

Just in case voters had begun to forget the details of Jeremy Hunt’s budget for the fewest last month, Labour has new analysis out today that finds that the average worker would have to save for roughly 400 years to receive any benefit from a key measure the Chancellor set out: scrapping the lifetime pension allowance. Hunt announced in March that the lifetime allowance – the cap on the amount workers can accumulate in pensions savings before paying extra tax, previously set at £1.07m – was being axed and revealed that the tax-free yearly allowance for pensions would also rise from £40,000 to £60,000, in a move Keir Starmer condemned at the time as a “huge giveaway to some of the very wealthiest”.

The Tories have justified the decision as a means of addressing staffing issues in the NHS by stopping high earners, including experienced doctors, from leaving the workforce (though statistics suggest its impact on doctor retention could be minimal). Highlighting Labour’s new analysis, Angela Rayner denounced the Tories’ decision as a “£1bn bung to the richest 1%”. The deputy Labour leader said: “Someone starting out their career today would have to work until the year 2423 before they’d see a penny from the Tories’ tax giveaway to the top 1%. At a time when families across the country face rising bills, higher taxes and frozen wages, this is the wrong priority at the wrong time.”

The latest GDP figures out this morning reveal that the UK economy showed no growth in February, with the Office for National Statistics (ONS) highlighting the impact of strikes by teachers and civil servants on activity. This flatlining of the economy follows growth of 0.4% in January, revised upwards from the previous ONS assessment of 0.3% growth. Hunt argued that today’s figures mean the economic outlook is “looking brighter than expected”, adding: “GDP grew in the three months to February, and we are set to avoid recession thanks to the steps we have taken.” But Rachel Reeves stressed: “The reality of growth inching along is families worse off, high streets in decline and a weaker economy that leaves us vulnerable to shocks.” The Shadow Chancellor declared: “Despite our enormous promise and potential as a country, Britain is still lagging behind on the global stage.”

Paul Nowak lay the blame for the UK’s stagnant growth squarely at the feet of the government, accusing ministers of having “sucked the life out of the economy by holding down the pay of millions of workers”. The TUC general secretary added: “Ministers should stop fighting to make workers poorer. A competent government would put pay growth at the heart of the UK’s economic plan.” Following on from the International Monetary Fund’s gloomy prediction that the UK’s economy will be the worst performing in the G20 this year – behind even sanctions-hit Russia – it is clear that the country’s economic woes are still far from over, whatever cheery spin the Chancellor chooses to put on the figures. Some of the only other people who may be sharing his cheer are Labour’s spinners. With new polling putting the cost of living top of voters’ priorities, attacking the Tories’ economic record continues to provide fertile ground for the opposition in the run-up to the local elections.