Labour’s North Sea madness will hit households in the pocketbooks, says MAGGIE PAGANO
Think of poor Rishi Sunak. How he must be cursing himself for holding the general election when he did.
Less than two weeks after his government was trashed in the polls, the International Monetary Fund has come up with an update that would leave prime ministers scratching their heads.
Britain is expected to grow by 0.7 percent this year, according to the latest IMF economic survey, with that rate expected to more than double to 1.5 percent next year.
Moreover, the UK is set to outpace its main European rivals next year, with growth outpacing the 1.3 percent expected for Germany and France and the 0.9 percent expected for Italy.
Eco-targets: Transitioning to net zero by 2030 will increase costs for households and businesses
Within the G7, Britain will overtake Japan, whose growth is expected to be just 1 percent next year.
They say one man’s loss is another man’s gain. And so Sunak’s timing proved to be bad. Sir Keir Starmer is lucky and should be pleased with the IMF’s forecast.
This level of growth is still low, but the increase at least suggests that the UK has broken out of its rut. After the boost to gross domestic product in May, the UK has grown by 1.5 per cent so far this year – the fastest period since pre-Covid days.
However, Starmer should not laugh too soon. He will not deliver on his big manifesto promise of securing the highest sustained growth in the G7.
He still has some catching up to do: the US is expected to experience economic growth of 1.8 percent, while Canada is the leader with 2.4 percent.
Britain may be out of the doldrums, but we are still stuck in a vicious circle of high debt, high taxes and low growth. Labour claims the cycle can be broken by scrapping planning rules, the bizarre National Wealth Fund and a raft of other measures.
Most damaging is the messianic move to bring the energy system to net zero by 2030.
This will push up costs for households and businesses, leaving the country vulnerable to expensive imports from uncertain countries, and even power cuts. This could prove to be Labour’s Achilles heel.
It is no wonder that economists remain so gloomy: the measures Labour is proposing are not nearly powerful enough to boost the economy or make it easier for young businesses to thrive.
A monthly Bloomberg survey of 56 analysts covering the United Kingdom found they expect growth of 0.8 percent this year – slightly higher than the IMF – but just 1.3 percent next year.
They are also sceptical about Labour’s claim that it can boost the economy in the longer term.
If Chancellor Rachel Reeves wants to play by the tax code, she’s going to have to change course. And raise taxes. Since she’s promised not to raise taxes on “working people,” the money has to come from somewhere else.
The oil and gas industry, which already pays 75 percent in taxes, is an obvious one to cut.
This also applies to other wealth taxes, such as increasing the capital gains tax or abolishing the exemption that allows family businesses to avoid paying tax on the value of the business when the owner dies, so that the business can be passed on.
Industries, jobs and communities would be destroyed overnight by such reckless taxation. My colleague Patrick Tooher has been to Aberdeen to discover the devastating impact a new tax attack would have on the oil industry and the region: 100,000 jobs lost along with £30bn of investment.
An oil industrialist compares doing business in the UK to war-torn Libya, but at least the Libyans wanted oil. Reeves should be careful what she wishes for.
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