The worrying inflation figures are just the latest to betray just how fragile the UK economy was as war in the Middle East erupted.
Inflation on the CPI measure already stood at a punishing 3 per cent in February – before the conflict sent oil and gas prices soaring and fuelled fears of a fresh cost-of-living shock.
That is 50 per cent higher than the 2 per cent target and the highest inflation rate in the G7.
And troublingly for Labour, it is up from the 2 per cent rate Sir Keir Starmer and Rachel Reeves inherited when they swept into Downing Street in July 2024.
Much of the increase stems from the Chancellor’s tax rises as well as her generous pay deals for public sector workers and those on the minimum wage.
Inflation is far from her only headache.
The economy was flatlining under Starmer and Reeves before war in the Middle East erupted
The economy – the fastest growing in the G7 at the time of the general election – flatlined in January and is no bigger than it was in June last year.
Hopes of a meaningful pick up this year are vanishing fast.
And even before the war took a sledgehammer to the British economy, unemployment in the UK stood at a five-year high of 5.2 per cent, having been 4.2 per cent when Labour came to power.
Youth unemployment of 14.5 per cent is at levels not seen for over a decade.
The nation’s finances also remain in a parlous state, with Ms Reeves overseeing borrowing of £14.3billion last month alone, the highest February figure on record outside Covid.
‘In an uncertain world we have the right economic plan,’ the Chancellor declared today.
These bleak figures suggest otherwise – as do the bond markets that were so instrumental in bringing down Liz Truss.
The yield on ten-year gilts – a key measure of how much it costs the UK government to borrow – surged above 5 per cent in recent days for the first time since 2008.
Britain pays more to borrow from international investors than any other country in the G7 with experts warning ‘the bond vigilantes are after the UK once more’.
The grim truth is that the economy was on its knees before the war erupted – and it is only going to get worse for Britain and our delusional Chancellor.
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