Reeves: Government 'gaslighting' people on economy

The government is "gaslighting" the British people over the state of the economy, the Opposition is to argue.

Shadow chancellor Rachel Reeves will tell business leaders in a speech on Tuesday the government's claims its economic plan is working are "deluded".

It comes ahead of key figures likely to show the UK emerging from recession later this week. The Bank of England could also take steps towards interest rate cuts.

The Tories said Labour had "no plan".

Speaking in a speech in the City of London, Ms Reeves will argue that suggestions the feel-good factor is returning are "completely out of touch with the realities on the ground".

On Friday, however, the first official data on GDP (gross domestic product) in the three months to March is likely to show that the economy grew, marking the official end to a shallow recession last year.

The Bank of England could take further steps towards interest rate cuts on Thursday too, ahead of a likely sharp fall in inflation - which measures how prices rise over time - later in the month.

While Ms Reeves will acknowledge "these things could happen this month", the Opposition's intervention is designed to pre-empt the government's argument about the cost-of-living crisis being over and the coming general election being about "protecting the recovery".

Just days after a difficult set of local and mayoral elections for the Conservatives, Ms Reeves will announce that Labour hopes to fight the general election "on the economy", saying that voters could choose "five more years of chaos with the Conservatives" or "stability with a changed Labour Party".

In response, chairman of the Conservative Party, Richard Holden MP, said: "The personnel may change but the Labour Party hasn't."

He said that the Labour Party has "no plan" and would take the British public "back to square one" with higher taxes and higher unemployment rates.

Despite abandoning its long-standing plan to borrow and spend £28bn of public money on new, green industries, Reeves will restate Labour's commitment to a new vision for a green economy, reflecting thinking in the US and Europe.

Last month, her national wealth fund "taskforce", including former Bank of England Governor Mark Carney, and the chief executives of Barclays and Aviva, met to discuss how to raise £22bn in private sector investment in next generation technologies.

It is expected to report back before the summer.