The top international economic and trade body the OECD has shattered Rachel Reeves’ hopes of securing good economic growth before the next election. New global forecasts, published this morning, reveal that the Chancellor’s policies are worsening unemployment due to huge new taxes and costs being piled onto businesses.

The report also suggests Ms Reeves will miss her inflation target every year of the forecasts. According to the OECD, projected GDP growth next year will fall to just 1.2%, down on their predictions earlier this year. It will rise to just 1.3% in 2027, though this is reliant on global trade improving.

Inflation will remain stuck at 2.5% in 2026, falling to 2.1% in 2027, though as the OECD notes this means it will stay “above target over the entire period” of their forecasts.

However the newly-published economic outlook is most damning on unemployment, warning it is set to rise to a whopping 5% in 2027 – comparable with the Covid pandemic and the Winter of Discontent.

The document makes repeated references to pressures being heaped on businesses by the government, including Ms Reeves hike last year to employers’ National Insurance and continuing increases to the minimum wage.

They pick out food inflation as a particular example of elevated inflation set to come, suggesting little respite from the cost of living crisis for ordinary Britons.

The OECD says the government must cut spending in the coming years if it wants to boost growth, something Ms Reeves’ latest Budget failed to do in the face of continuing benefits revolts from hard-left Labour backbenchers.

Responding to the damning document, Rachel Reeves insisted her Budget is paying dividends.

The Chancellor championed: “Last week, my Budget cut waiting lists, cut borrowing and debt, and cut the cost of living. Less than a week later, the OECD has upgraded our growth and cut its forecast for inflation next year.

“The choices that I made at the Budget are expected to cut inflation by 0.4 percentage points, helping cut the cost of living for households and costs for our businesses.

“Alongside our plans to deliver growth, by investing in this country’s infrastructure, attracting major private investment, and pushing through bold planning reforms, we’ll deliver on our number one mission to put more money in people’s pockets.”

However shadow Chancellor Sir Mel Stride blasted: “The OECD are clear: unemployment is set to rise, driven in part by Labour’s Jobs Tax, and inflation will stay above target for the rest of their forecast.

“Rachel Reeves promised growth but growth is expected to weaken next year, because of her choices. This is the cost of policies that punish work, businesses and investment.”