By William Schomberg
LONDON (Reuters) – Britain’s opposition Labour Party on Tuesday accused Prime Minister Rishi Sunak’s government of being out of touch with reality by signalling that voters will soon feel the benefit from the end of a recession likely to be confirmed by data this week.
With Labour far ahead of Sunak’s Conservatives in opinion polls before an election later this year, its finance chief Rachel Reeves used a speech on Tuesday to try to derail attempts by the government to rebuild its reputation on the economy.
“When the prime minister and chancellor say: ‘we’ve turned the corner, the plan is working, look out for the feel-good factor’, I think that’s deluded, and it’s really out of touch with the realities that people are facing,” Reeves said.
Sunak and finance minister Jeremy Hunt have argued that the drop in inflation and improving economic data show that the economy is emerging from the chaos of the COVID-19 pandemic and the energy crisis that followed Russia’s invasion of Ukraine.
Sunak said on Monday that he was determined to show the country that it was making progress, even after his party suffered heavy blows in local and mayoral elections last week.
But Reeves highlighted forecasts showing household disposable income, adjusted for inflation, is on course to fall between one British national election and the next for the first time since at least the 1950s.
“And yet you’ve got this bizarre situation at the moment where Rishi Sunak and Jeremy Hunt are going on some sort of victory lap for getting minimal growth rather than being in recession,” Reeves said.
“I’m just so much more ambitious for our country than that,” she said, pointing to Labour’s aim to make Britain the fastest-growing Group of Seven economy by restoring the country’s political stability and attracting more private investment.
Economists polled by Reuters predict that official figures due on Friday will show Britain’s economy grew by 0.4% in the first three months of 2024 after declining in the third and fourth quarters of 2023, which represented a shallow recession.
Hunt said last week that Britain was winning the war against inflation which peaked above 11% in later 2022 and that the government needed to stick to its plan to return the economy to longer-term growth.
(Reporting by William Schomberg, editing by Ed Osmond)
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