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RACHEL Reeves must avoid catastrophic Budget mistakes by raising taxes and stunting growth, Jeremy Hunt says.
The Chancellor was targeted by her predecessor who suggested there could be a £39billion surplus instead of her supposed £22billion black hole.
The warning shot came as official figures showed the economy grew by 0.5 per cent in the three months to June, down from earlier estimates of 0.6 per cent.
When asked if the economy will get worse before it gets better, he said: “They will get worse if Labour makes catastrophic mistakes in the budget and hikes up tax in a way that destroys growth.
“I think one of the biggest lies we’ve had since Labour came to office is this nonsense about having the worst economic inheritance since the Second World War.”
He also claimed the Government could even have a budget surplus of £39 billion to play with in next month’s Budget.
Mr Hunt warned that welfare reform may now be “untouchable” following the backlash to means-test the winter fuel allowance.
Ministers have already warned of difficult decisions at her first Budget on tax, welfare and Whitehall spending.
Labour chair Ellie Reeves said: “Instead of an apology, Jeremy Hunt has criticised every tough decision the Labour government is making to fix their mess.
“It is like watching an arsonist chastise the fire brigade for putting the fire out.”
Meanwhile, official figures yesterday showed gross domestic product grew by 0.5 per cent in the three months to June.
They were down from earlier estimates that the economy had grown by 0.6 per cent during the period.
The downgrade marks a sharper slowdown on the 0.7 per cent growth in the first quarter as consumers cut back on spending.
Separate figures have shown the economy had zero growth in June and July.
The Chancellor’s Budget has already caused businesses to put hiring and investment plans on ice with a fresh poll showing a deteriorating outlook for growth.
Despite Labour’s pro-growth agenda, a poll by the CBI showed that private companies expect no change for the rest of the year while manufacturing output is expected to shrink for the first time in ten months.
Alpesh Paleja, CBI interim deputy chief economist said: “After a run of positive expectations, the outlook for growth for the rest of this year has deteriorated.
They said that the budget needed ‘to give businesses the confidence they need to invest'”.
