Chancellor's response to ONS inflation stats for June 2025 + other reactions

Chancellor of the Exchequer Rachel Reeves said:
 
“I know working people are still struggling with the cost of living. That is why we have already taken action by increasing the national minimum wage for three million workers, rolling out free breakfast clubs in every primary school and extending the £3 bus far cap. But there is more to do and I'm determined we deliver on our Plan for Change to put more money into people's pockets.”

Conservative response to CPI inflation figures

Sir Mel Stride MP, Shadow Chancellor of the Exchequer, said:

“This morning's news that inflation remains well above the 2 per cent target is deeply worrying for families.

“Labour's decision to tax jobs and ramp up borrowing is killing growth and stoking inflation – making every day essentials more expensive – and because Labour are too weak to take tough choices on spending, more tax rises are on the way, leaving families facing ever-rising costs.

“Only the Conservatives will break this cycle by taking the responsible approach and backing the makers - the people who work hard, create wealth and jobs, and fund public services.”

Notes to Editors:

Labour have ruined the economy and the public finances: 

• The Office for Budget Responsibility (OBR), OECD, and Bank of England have confirmed a collapse in economic growth. This year, the OBR, OECD and the Bank of England have downgraded the UK's growth forecasts. For 2025, the OBR halved the UK's growth forecast (OBR, Economic and Fiscal Outlook, 26 March 2025, link; The Financial Times, 6 February 2025, link; MoneyWeek, 3 June 2025,link).

• Labour's unfunded welfare promises have created a £9 billion black hole in the nation's finances.Scrapping changes to the PIP eligibility criteria will cost £4.5 billion in 2029-30. Reversing the winter fuel payment will cost £1.25 billion a year. Scrapping the two-child benefit cap would cost £3.5 billion in 2029-30 (The Financial Times, 1 July 2025, link; HM Treasury, Spring Statement 2025, 26 March 2025, link; HM Treasury, Press Release, 9 June 2025, link; The Resolution Foundation, Report, 12 May 2025, link; Politico, London Playbook, 10 December 2024, link).

• Rachel Reeves' Autumn Budget pushed the tax burden to a ‘historic high'. In the March 2025 Economic and Fiscal Outlook, Office for Budget Responsibility (OBR) said taxes would rise from 35.3 per cent of gross domestic product (GDP) to a ‘historic high' of 37.7 per cent in 2027-28 (OBR, Economic and Fiscal Outlook, 26 March 2025, link).

• Rachel Reeves' decisions mean higher borrowing is risking the long-term security of our public finances. According to the Office for Budget Responsibility (OBR), public sector net debt is expected to reach 96.1 per cent of GDP by 2029-30 - the highest level seen outside the pandemic since 2010 (OBR, Economic and Fiscal Outlook, 26 March 2025, link).

More tax rises could come despite Rachel Reeves' assurances she was ‘not coming back' with more tax hikes:

• After her Autumn Budget, Rachel Reeves said she is ‘not coming back' with more tax rises – a promise she is preparing to break. Speaking to business leaders Reeves said: ‘I'm really clear, I'm not coming back with more borrowing or more taxes'. However, when asked whether she was prepared to rule out tax rises after the welfare U-turn, Rachel Reeves said: ‘I'm not going to, because it would be irresponsible for a chancellor to do that. We took the decisions last year to draw a line under unfunded commitments and economic mismanagement. So we'll never have to do something like that again. But there are costs to what happened' (The Guardian, 4 July 2025, link; BBC News, 25 November 2024, link;GB News, 11 June 2025, archived).

• Keir Starmer has not ruled out reversing Conservative plans to end the Personal Allowance freeze – despite Rachel Reeves admitting that an extension would breach Labour's manifesto promises.When asked whether the Government remained committed to ending the personal allowance freeze, Keir Starmer said: ‘Mr Speaker, no Prime Minister or Chancellor are going to write a budget (inaudible)'. In the Autumn, Rachel Reeves said: ‘I am keeping every single promise on tax that I made in our manifesto, so there will be no extension of the freeze in income tax and national insurance thresholds beyond the decisions made by the previous Government' (Hansard, 9 July 2025, Vol.770 Col.938, link; Hansard, 30 October 2024, Vol. 755 Col. 822, link).

• Keir Starmer has not ruled out new taxes on homes, pensions and savings. When Kemi Badenoch questioned Keir Starmer on the introduction of a Wealth Tax, Starmer said: ‘The right hon. Lady says that we should not be asking them for advice on the economy. She is absolutely right about that; we will not be asking for their advice'. Stuart Adam, senior economist at the IFS, noted a ‘Wealth Tax' could ‘raise significant revenue if it applied to the bulk of the UK's wealth – that would include the homes and pensions of the middle class' (The Guardian, 4 July 2025, link).

TUC - Bank of England must cut interest rates to put money back into people's pockets  

Commenting on CPI inflation rising to 3.6 per cent, TUC General Secretary Paul Nowak said:   

“Households are still feeling the pain of higher prices.  

“High rents, energy, petrol and water bills mean many workers are struggling to keep their heads above water.  

“The global uncertainty impacting the economy is showing no signs of settling down. But workers should not be bearing so much of the brunt.  

“It's time the Bank of England stepped in to deliver a 0.5% cut to interest rates. This will ease pressure on households, put more money into people's pockets, and help families get back on their feet.” 

ENDS 

Notes to editors: - RPI rose by 4.4% 

British Chambers of Commerce: Inflation Headache Remains for Firms  

Responding to the latest inflation data published this morning by the Office for National Statistics, Stuart Morrison, Research Manager at the British Chambers of Commerce said:  

“With CPI rising by 3.6% in June, off the back of fuel price changes, the daily inflation headache for businesses should not be underestimated. Inflation continues to be a major external concern for the firms we represent, cited by over half of businesses in our latest survey.   

“As the Bank of England Governor acknowledged at our annual conference last month, the labour market impact on inflation needs to be closely monitored. The recent employer NICs increase has significantly weakened business sentiment, and hiring may suffer as a result.   

“The Bank of England will need to consider carefully further interest rate cuts before the labour market loosens too much. Firms will be watching that delicate balancing act intently.   

“Easing cost pressures on business is a crucial piece of the jigsaw to help control inflation. A clear tax roadmap, which includes national insurance, would give firms the certainty they need to plan their investment. Our Blueprint for Growth, published last month, details other practical policies we believe can drive forward the UK economy.”