Labour is talking ‘nonsense’ about the dire state of the economy in order to justify tax rises, former chancellor Jeremy Hunt claimed today.

Mr Hunt lashed out at his successor in No11 Rachel Reeves over claims he and other senior government figures have made about the fragility of UK PLC.

He questioned claims by Ms Reeves and others that Labour had inherited the worst situation since the Second World War, pointing to inflation that has fallen to 2 per cent and improving growth. 

The Chancellor used her own appearance on the BBC’s Sunday Morning with Laura Kuenssberg to say that the Tories had left the economy in a mess. 

And on Sky, Treasury Minister James Murray said what they had learned since July 4 confirmed their claim of being handed ‘the worst set of circumstances since the Second World War’.

But in his own appearance on the BBC Mr Hunt, the shadow chancellor, branded the claims ‘nonsense’.

‘You only need to look at the last time a government changed hands between parties in 2010. Compared to then, inflation is nearly half what it was, then we had markets collapsing now we have the fastest growth in the G7, we have unemployment nearly half what it was then,’ he said.

‘It’s a very transformed picture, and I think the reason that she’s doing this is that she wants to lay the ground for tax rises.

‘(It’s) perfectly legitimate for a new government to come in and say they want to spend more, tax more – every Labour government in history has done that – but she should have been honest about that before the election.’

It came as Ms Reeves signalled she is prepared to give thousands of teachers, NHS staff and police officers above-inflation pay rises.

The new Labour chancellor warned there was ‘a cost’ to not giving public sector workers pay increases in terms of strikes and recruitment problems.

It came after reports suggested independent pay review bodies have recommended a 5.5 per cent rise for teachers and around 1.3 million NHS staff. This pay rise is in line with that given to the private sector.

Inflation currently sits at 2 per cent, although it was at a 40-year high of 11.1 per cent in October 2022.

The headline CPI was unchanged from May, and bang on the Bank of England‘s target level.

However, analysts had pencilled in a marginal fall, and price rises in the services sector remained stubbornly high at 5.7 per cent.

Experts pointed out that the biggest upward pressure came from restaurants and hotels, with the ‘global phenomenon’ pop star Taylor Swift touring in the UK during the month. 

They warned there is now no guarantee that Threadneedle Street will start to bring down the base rate when the Monetary Policy Committee (MPC) meets on August 1.

Speaking to the BBC Ms Reeves said the Government will ‘make sure the sums add up’.

And she claims the deal for teachers was on the desk of Tory education secretary Gillian Keegan before the election but she did nothing with it.

The Chancellor has accused former ministers of ‘running away’ from decisions on public sector pay, telling the BBC’s Sunday With Laura Kuenssberg programme: ‘They called an election, they didn’t make the tough decisions, they ran away from them and it’s now up to us to fix it and to pick up the pieces.’

But a respected expert has warned the Chancellor will have to either increase taxes or borrowing, or make major spending cuts to services, to find the extra money involved. 

Paul Johnson, director of the influential Institute for Fiscal Studies, said it would cost an extra £3 billion for schools and the NHS alone.

Speaking to the BBC this morning, Ms Reeves said: ‘I asked officials that first weekend, after the election, to do a full analysis of the state of the public finances, the public spending pressures that we’re under, and I’ve committed to present that to Parliament by the end of this month, and I will do that. 

‘Because I really want to be honest with people, I think people know that things are a mess. 

‘The first Parliament, the last one, where living standards were lower at the end than they were at the beginning, public services on their knees, a tax burden at a 70 year high, debt almost the same size as our entire economy, so I’m going to level with people about the scale of the challenge, and then begin to fix the foundations so we can start and rebuild our country and our economy.’

Meanwhile Mr Murray told Sky: ‘We were warning throughout the election campaign that we would be likely to inherit the worst set of circumstances since the Second World War. And frankly, since we’ve taken office, everything we’ve seen so far, has confirmed that.’