Rachel Reeves 'needs scapegoat for mess the UK's in - and she's found her woman'

A Tory peer has accused Rachel Reeves of using Liz Truss as a scapegoat for her handling of the economy. The Chancellor cited the former Conservative prime minister's disastrous mini-budget as one factor that has "weighed heavily" on the UK economy as she looks to plug a black hole in public finances, estimated to be as much as £50 billion.

Daniel Hannan, the Lord Hannan of Kingsclere, said Ms Reeves has "placed herself in a doom loop" and said the Government needs to cut spending to improve Britain's economic outlook. It comes as a new report by the International Monetary Fund (IMF) said UK inflation is set to surge to the highest in the G7 in 2025 and 2026. Lord Hannan, president of the Institute Of Free Trade think tank, said Ms Reeves is "blaming everyone else".

In an opinion piece for the Daily Mail, Lord Hannan wrote: "It's all the fault of the Tories! Of Liz Truss! Of Brexit!

"Sorry, Chancellor, but no one is falling for it. Just as no one is falling for your delusional claim - made before you left for this week's IMF meeting in Washington - that you are 'delivering national renewal built on the rock of economic stability'."

Lord Hannan, a pro-Brexit former Conservative MEP, said Labour has "exacerbated" what he described as "remediable problems" following the COVID pandemic "wrecking ball".

He said lockdown "increased expectations of government intervention" and "introduced millions of people who had never before claimed from the state to an alternative way of living".

He expressed concerns over the "soaring" number of people claiming long-term sickness benefits, as well as the popularity of working from home and its impact on productivity.

The author and columnist accused Labour of "spending money with abandon", citing public sector pay increases as an example.

"The previous Government was trying, however inadequately, to bring spending closer to where it had been before the pandemic," he wrote in the Mail.

Lord Hannan added: "We have now reached the terrifying point where more households are net claimants from the state than are net contributors to it - and this shapes Labour's electoral calculations.

"The idea that any of these problems was caused by Brexit is too silly to merit serious refutation."

Ms Reeves has admitted she is looking at potential tax rises and spending cuts in her Budget next month.

"Austerity, Brexit, and the ongoing impact of Liz Truss's mini-budget, all of those things have weighed heavily on the UK economy," she told Sky News.

She later suggested higher taxes on the wealthy could be announced on November 26.

Despite its inflation warning, the IMF also said Britain is set to the second fastest-growing G7 country this year.