Labour's gilt-growth doom loop

And why I think tax rises and not spending cuts will be their response to breaching the fiscal rules

Responding to the last Budget of the previous government in March 2024 the now Chancellor said: “We are trapped in a Tory doom loop of low growth and high taxes, and it is working people who are paying the price.”

This was in response to a Budget that the OBR said raised economic growth and brought in “significant net tax cuts”. A couple of months later an ONS official said the economy was going “gang-busters” and GDP growth was the highest in the G7. Quite the contrast to the economic impact of Rachel Reeves’ first Budget. Below I look at the doom loop Labour has created and why I think this means tax rises and not spending cuts are coming.