Rachel Reeves faced a fresh blow yesterday as figures showed the economy shrank unexpectedly in May for the second month in a row.
Sparking further warnings of a tax raid this autumn, the Office for National Statistics (ONS) said gross domestic product (GDP) contracted by 0.1 per cent.
It follows a 0.3 per cent drop in April – prompting fears the economy is heading for an overall recession in this year’s second quarter.
Ms Reeves faced more embarrassment as it emerged she called for an emergency budget when the economy also shrank by 0.1 per cent in 2022.
The Tories accused her of ‘rank hypocrisy’, and asked: ‘If [she] won’t follow her own advice, how can she expect the country to follow her?’
In the unearthed tweet from May 2022, Ms Reeves said: ‘GDP figures see dramatic drop to -0.1 per cent in March. This adds to the worries families already face from the cost of living crisis.
‘If the PM and Cabinet come back from their Away Day in Staffordshire today with anything less than an Emergency Budget, they will have failed.’
As well as the latest figures showing the economy had shrunk by the same amount as in March 2022, the Labour Government was also on a Cabinet away day, at Chequers, yesterday.
Ms Reeves said the figures were ‘disappointing’ but renewed her pledge to boost economic growth. Amid speculation she will launch a tax raid this autumn, business yesterday claimed the Chancellor was already taxing it too hard.
Rachel Reeves faced more embarrassment as it emerged she called for an emergency budget when the economy also shrank by 0.1 per cent in 2022.
An old social media post from 2022 has been highlighted, in which Ms Reeves reacted to a 0.1 per cent monthly fall in activity by demanding an emergency Budget
GDP was down 0.1 per cent in May, following a 0.3 per cent drop in April
Ben Jones, the Confederation of British Industry’s lead economist, said: ‘With growing fiscal challenges and the autumn Budget on the horizon, the Chancellor must provide clear reassurance – no new taxes on business and instead offer a commitment to work alongside firms to dismantle barriers to growth.’
The ONS data shows GDP was weighed on by the manufacturing sector, which suffered another steep decline in activity and falling construction output.
Shadow Chancellor Mel Stride told the Mail last night: ‘In 2022, Rachel Reeves demanded an emergency budget over a minus-0.1 per cent dip in GDP.
‘Today, under her watch, we’ve had two consecutive months of economic contraction – and all she offers is spin. This is rank hypocrisy.
‘If Rachel Reeves won’t follow her own advice, how can she expect the country to follow her?’
Reform UK deputy leader Richard Tice said: ‘Three years ago, Rachel Reeves said that a 0.1 per cent drop in GDP figures was grounds for an emergency budget.
‘She’s now presided over two back-to-back months of GDP decline and is leading the UK into recession. It’s about time she was handed her P45.’
A No 10 spokesman said the GDP figures ‘mainly reflect global instability and monthly figures tend to be more volatile’, adding: ‘It comes after a 0.7 per cent growth in Q1 from this year, far beyond the OBR’s forecast for 0.2 per cent… The UK is still forecast by the International Monetary Fund to be the fastest growing European G7 country.’
Asked about a possible emergency budget, No 10 said: ‘There is a Budget this autumn and we will work towards that in the normal way.’
