Labour’s North Sea folly will hit households, says MAGGIE PAGANO

Let us spare a thought for poor Rishi Sunak. How he must be regretting having held a general election when he did.

Less than two weeks after their government was defeated at the polls, the International Monetary Fund comes out with an update that prime ministers would give anything for.

According to the latest IMF economic survey, Britain is likely to grow by 0.7 percent this year and that figure is expected to double to 1.5 percent next year.

What’s more, the UK is forecast to outpace its main European rivals next year, growing faster than the 1.3 per cent forecast for Germany and France, and the 0.9 per cent for Italy.

Among the broader G7, Britain will overtake Japan, which is forecast to grow by just 1 percent next year.

They say that one man’s loss is another man’s gain. And so it has turned out to be Sunak’s bad timing. Sir Keir Starmer is in luck and must be delighted with the IMF’s forecast.

This level of growth is still low, but at least the rebound suggests the UK has emerged from its doldrums. After the boost to gross domestic product in May, the UK has grown by 1.5 per cent so far this year, the fastest pace since pre-COVID times.

However, Starmer should not smile too soon. He will not fulfil his big manifesto promise, which was to secure the highest sustained growth in the G7.

But there is still a long way to go: the United States is forecast to grow by 1.8 percent, while Canada leads the pack at 2.4 percent.

Britain may be out of the rut, but we remain trapped in a vicious cycle of high debt, high taxes and low growth. Labour argues that the cycle can be broken by scrapping planning rules, its bizarre National Wealth Fund and a raft of other measures.

Most damaging of all is the messianic move to transition the energy system to net-zero emissions by 2030.

This will increase costs for households and businesses, leaving the country vulnerable to costly imports from volatile countries, or even blackouts, and may prove Labour’s Achilles’ heel.

No wonder economists remain so pessimistic: the measures proposed by the Labour Party are nowhere near powerful enough to revive the economy or facilitate the growth of young companies.

Bloomberg’s monthly survey of 56 UK forecasters shows they expect growth of 0.8 percent this year (slightly higher than the IMF), but just 1.3 percent next year.

They are also sceptical of Labour’s claim that it can boost the economy in the long term.

If Chancellor of the Exchequer Rachel Reeves wants to stick to the tax rules, she will have to change her approach. And on taxes. Since she has promised not to tax “workers”, the money has to be found elsewhere.

The oil and gas industry, which already pays 75 percent in taxes, is one that is obvious to take advantage of.

The same is true for other estate taxes, such as increasing capital gains taxes or eliminating the exemption that allows family businesses to avoid paying taxes on the value of the business if the owner dies so that they can pass it on to others.

Such reckless taxation would destroy industries, jobs and communities overnight. My colleague Patrick Tooher was in Aberdeen to discover the devastating impact another tax raid would have on the oil industry and the region: 100,000 jobs lost along with £30bn of investment.

An oil industrialist compares doing business in the UK to war-torn Libya, but at least the Libyans wanted oil. Reeves should be careful what he wishes for.