Government 'gaslighting' public about state of economy, Labour claims

The government is "gaslighting" the public about the state of the economy, the shadow chancellor has said.

Rachel Reeves attacked the Conservatives in a speech in the City of London, as the opposition takes the fight to the government on their own turf ahead of the general election.

Running a strong economy has long been the focus of Conservative election campaigns.

And with a raft of economic data coming out this week, Ms Reeves is looking to get ahead of the government's messaging - saying Chancellor Jeremy Hunt and Prime Minister Rishi Sunak claiming the economy is improving is "deluded".

The Bank of England will on Thursday make its latest decision on interest rates, with expectations that borrowing costs will be held at 5.25%.

The government wants this rate to come down, but the Bank sets the base rate independently.

There is also quarterly GDP data from the Office for National Statistics (ONS) coming this week, which will likely show the UK coming out of the technical recession it has been in.

Taking the front foot in the wake of the drubbing the Conservatives took in the local elections, Ms Reeves said: "By the time of the next election, we can, and should, expect interest rates to be cut, Britain to be out of recession and inflation to have returned to the Bank of England's target.

"Indeed, these things could happen this month.

"I already know what the chancellor will say in response to one or all these events happening. He has been saying it for months now: 'The economy is turning a corner,' 'our plan is working,' 'stick with us'.

"I want to take those arguments head on because they do not speak to the economic reality."

She added: "During the local elections I travelled across the country. I spoke to hundreds of people. I listened to their stories.

"And when they hear government ministers telling them that they have never had it so good, that they should look out for the 'feelgood factor,' all they hear is a government that is deluded and completely out of touch with the realities on the ground.

"The Conservatives are gaslighting the British public."

The shadow chancellor said Labour will fight the election on the economy, point to previously announced policies such as a national wealth fund to deliver private and public investment, reform planning laws to build 1.5 million homes, and create 650,000 jobs in the UK's industrial heartlands.

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Conservative Party chairman Richard Holden said: "The personnel may change but the Labour Party hasn't. Rachel Reeves still hero-worships Gordon Brown, who sold off our gold reserves and whose hubris took Britain to the brink of financial collapse.

"Labour have no plan and would take us back to square one with higher taxes, higher unemployment, an illegal amnesty on immigration and a plot to betray pensioners, just like Gordon Brown did."