Labour leadership chaos ‘is damaging the economy’ | Politics | News
Keir Starmer and Wes Streeting have a falling out (Image: PA)
The Conservatives have warned that Labour’s leadership turmoil threatens the UK economy despite new figures showing unexpected growth. A similar message was issued by Chancellor Rachel Reeves in a warning to rebels such as former Health Secretary Wes Streeting, who are trying to oust Sir Keir Starmer from Number 10.
According to the Office for National Statistics, production increased by 0.6% in the first three months of the year and by 0.3% in March alone; This shows that the US-Israeli war with Iran has not caused major damage to the economy so far. But employers warned the full impact of the conflict was yet to be felt, while Conservative Shadow Chancellor Mel Stride said concerns in financial markets were increasing the cost of government borrowing.
Read more: Wes Streeting’s full damning resignation letter to Keir Starmer
Read more: Wes Streeting resigns and criticizes Starmer’s ‘mistakes’ and lack of vision
He said: “The chaos surrounding the Labor leadership is destabilizing the British economy.
“This week, borrowing costs hit a three-decade high as Labor leadership hopefuls competed to promise more spending, borrowing and fantasy economics. Only the Conservatives have a serious plan to Make Britain Work Again and fix the public finances through our Golden Economic Rule.”
On Tuesday, 10-year bond yields rose to their highest level since 2008, while 30-year bond yields reached their highest level since 1998. This means the cost of government borrowing has increased.
Ms Reeves has sent a clear message to colleagues who are plotting against the Prime Minister. He said: “Now is not the time to risk our economic stability. Doing so would make families and businesses worse off.
“Instead, this Government gets on with the job of building a stronger, more resilient and future-ready economy.”
Business leaders welcomed the growth data but said the economy remained fragile and highlighted rising energy costs, as well as the cost of employing staff, following Labour’s increases in National Insurance and the minimum wage.
Stuart Morrison, Director of Research at the British Chamber of Commerce, said: “Firms are concerned that the full impact of the Iran conflict will begin to be seen in the coming months.
“Businesses are facing major cost pressures. Our latest survey shows that even before the Middle East surge, 73% cited labor costs and 52% energy costs as price drivers. Business confidence remains low and firms are struggling to invest.”
He also emphasized that political uncertainty “only heightens trade concerns.” Mr Morrison said: “Ministers need to serve in partnership with business to grow our economy in difficult times. This can only be achieved by supporting investment, boosting productivity and getting more firms to export.”
According to some economists, the UK may have experienced a short-term growth spurt that is unlikely to be sustained in the coming months.
Julian Jessop, an economist at the Institute of Economic Affairs, said GDP in the first quarter “will be as good as it gets” for the economy.
He said business and consumer surveys “are already pointing to a much weaker second quarter as the effects of the crisis in the Middle East begin to take hold.”
“For now, manufacturing and most services appear to be doing well, perhaps taking advantage of the demand put forward to overcome expected supply shortages and price increases.
“But activity in key sectors such as retail, construction and the housing market is starting to weaken sharply and confidence remains fragile.”
