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Monday, July 7, 2025

Labour’s Budget Unravels as Growth Stalls and Jobs Vanish

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The cracks are already showing in Rachel Reeves’ first Spending Review, with the UK economy shrinking and job losses mounting just one day after the Chancellor unveiled her plans.

New figures confirm that the UK’s gross domestic product fell by 0.3 percent, delivering an immediate blow to Labour’s economic credibility.

The sharp contraction comes hot on the heels of Labour’s Spending Review, which had promised a £9.1 billion boost for Scotland’s public finances.

However, expert analysis from the respected Fraser of Allander Institute has quickly poured cold water on those claims.

In a stinging assessment, the institute described Labour’s figures as neither transparent nor helpful, and forecast that Scotland’s funding will in fact be £700 million lower than Labour’s central estimate published barely a fortnight ago.

SNP Economy spokesperson Dave Doogan MP did not hold back in his criticism.

He said the Labour government is destroying jobs and choking off growth, warning that the latest GDP slump follows an alarming rise in unemployment.

Official data shows the number of people on payroll fell by 55,000 between March and April, with a further drop of 109,000 forecast for May.

Unemployment has now climbed to its highest level in four years, eclipsing the grim records set under both Rishi Sunak and Liz Truss.

Mr Doogan also warned that the much-trumpeted Spending Review is already falling apart under the weight of scrutiny.

“Just one day has passed since the Labour government’s Spending Review and Rachel Reeves’ budget has already gone bust,” he said.

“The economy has retracted and expert analysis has shown the big claims do not stand up to scrutiny.”

He added that Scotland’s supposed budget boost had vanished overnight.

“The Fraser of Allander Institute has been explicitly clear that the Labour Party’s own figures for Scotland are neither transparent nor helpful.

“In just 24 hours, the Labour government’s Spending Review has fallen apart.”

The SNP have also condemned Labour’s decision to press ahead with what they describe as a national insurance jobs tax hike, which they say is accelerating job losses and driving up unemployment.

Mr Doogan accused Labour of failing to stand up for Scotland’s industries, pointing out that while ministers have celebrated investment in carbon capture and nuclear projects in England, Scotland’s Acorn carbon capture project remains in limbo with no firm commitment or funding.

“Broken Brexit Britain is in terminal decline,” he said.

“Yesterday, we witnessed a Chancellor stubbornly sticking to a botched Tory spending plan that is not working.

“Today, Scots are waking up to yet more evidence that Westminster simply does not work for Scotland.”

With autumn’s budget fast approaching, many economists believe Labour may be forced to impose deeper spending cuts or tax rises to stay within its self-imposed fiscal rules.

The honeymoon period for Reeves’ first budget appears to have ended before it even began.

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