Britain faces worst decade of growth in a century

The UK is on track for its worst decade of growth in 100 years, as Rachel Reeves prepares another round of tax rises that will hammer the economy.

The 2020s are set to go down in history as the worst decade for GDP growth and improvements in living standards in a century, analysis by former Bank of England rate-setter Andrew Sentance shows.

The economy is expected to grow by 1.1pc a year on average this decade, the lowest average annual rate since the 1920s.

GDP per head, which is often used as a measurement of living standards, is projected to rise only by 0.4pc each year on average – also the worst rate in a century.

The last time the UK experienced a more difficult economic period was in the 1920s, a decade blighted by mass unemployment, decline and deflation in the aftermath of the First World War.

The 2020s are predicted to be far worse for growth than other historic periods of turmoil – including the aftermath of the financial crisis, the upheaval of the 1970s that ended in an International Monetary Fund bailout and the Second World War.

The analysis by Mr Sentance paints a worrying picture for Rachel Reeves and Sir Keir Starmer, who have made improving living standards central to their pitch to voters.

The Chancellor is now preparing to unveil another tax raid, feared to match last year’s £40bn Budget.

Economists caution tens of billions of pounds in tax rises would only make matters worse. Mr Sentance, the independent economist behind the analysis, said: “Raising taxes will just weaken growth further. Reining in spending is the only long-term solution.”

James Smith, research director at the Resolution Foundation, said: “Higher taxes, fundamentally, will provide a break on activity in the coming months and years.”

He added: “We’ve had a very pronounced slowing in GDP per capita growth. That is really, really concerning because it is the key metric for living standards.”

Polling suggests Reform could shatter Britain’s two-party system at the next election, with dissatisfaction about the economy one of the key issues driving voters towards Nigel Farage’s party.

YouGov polling shows only 19pc of voters would support Sir Keir’s party if a general election happened now, while 27pc would back Reform. The Conservatives are polling neck and neck with the Green Party, at 16pc.

Mr Sentance said it was “no wonder that politicians are struggling to satisfy the electorate” given the economic conditions.

He said: “It’s going to be a long, long haul for whichever government is in charge. The last government didn’t do a very good job. This Government seems to be almost doing a worse job.