Labour Got Its Growth Headline — But Not Its Growth Miracle
Rachel Reeves finally has a GDP number to celebrate — but beneath the headline, Britain still looks fragile, overtaxed, underbuilt and politically restless.
I joined Mike Graham for my regular weekly slot this morning to discuss the latest GDP figures, Rachel Reeves’ attempt to claim Labour’s economic plan is working, Keir Starmer blaming Brexit, rising gilt yields, and the political earthquake in Wales after Labour’s collapse in the Senedd election.
Rachel Reeves finally has a growth number to celebrate — but the detail tells a much less comfortable story.
You can watch the full discussion below.
GDP is better — but this is not a miracle
The latest GDP figures are not bad. The UK economy grew by 0.6% in the first quarter of 2026, which is clearly stronger than the sluggish growth we have seen in recent months. GDP per head also rose, which matters because it means this was not just population growth flattering the headline.
So yes, this is better news.
But it is not the economic miracle Rachel Reeves wants to sell.
Scratch beneath the surface and the picture looks much more fragile. Growth was heavily services-led. Household consumption improved, but not dramatically. Production rose only slightly. Manufacturing looked better in places, but part of that was helped by transport equipment bouncing back after earlier disruption.
That is not a broad-based private-sector boom.
It is one better quarter after a long period of drift.
Labour will say: the plan is working.
The data says: the economy had a decent quarter, but the foundations are still patchy.
Britain is patching, not building
The construction figures are probably the most damaging part of the release for Labour.
This was supposed to be the government of “build, build, build”. More homes. More infrastructure. More growth. A planning revolution. A construction boom.
But the data does not show Britain building its way out of trouble.
Total construction output rose slightly, but the growth was driven by repair and maintenance, not new work. In fact, new work fell. That means the sector was being lifted by people fixing and maintaining the existing estate, not by a wave of new homes or major projects.
That gives us the clearest line from the whole release:
Britain is not building. It is patching.
And the forward-looking picture is no better. New construction orders fell sharply in the quarter, suggesting the future pipeline is weakening too.
For a government that promised to get Britain building again, that is a serious problem.
Starmer’s Brexit excuse does not stack up
We also discussed Keir Starmer’s latest attempt to blame Britain’s problems on Brexit.
This has become Labour’s all-purpose alibi: weak growth, weak living standards, poor delivery — apparently it can all be blamed on a referendum from nearly a decade ago.
But the data does not support using Brexit as the explanation for everything wrong with the country.
Since the Brexit vote, UK GDP growth has been broadly in line with several major European economies. Britain has not collapsed relative to France, Italy or Germany. In fact, Germany — so often presented as the powerhouse of the European Union — has had a particularly weak period.
That does not mean Brexit had no economic consequences. Of course there have been frictions and costs.
But Starmer wants Brexit to do far more work than the data allows. He wants it to be the permanent excuse for weak growth, weak living standards and poor government delivery.
That is not serious economics.
If Labour wants to explain Britain’s problems, it should start with the things it controls now: tax, regulation, energy costs, borrowing, public spending, business confidence, planning, productivity and investment.
Blaming Brexit is not a growth strategy.
It is deflection.
The bond market is flashing warning signs
Rachel Reeves also has another problem: the bond market.
Gilt yields matter because they show what the government has to pay to borrow money. When yields rise, debt interest costs rise. That means more taxpayer money going on servicing debt, rather than public services or tax cuts.
Labour spent years blaming Liz Truss for what happened to gilt yields after the mini-Budget.
But on key measures, borrowing costs are now higher than they were during the Truss episode.
That creates a very obvious political problem.
If rising gilt yields were proof of Conservative incompetence then, Labour cannot pretend they are irrelevant now.
The market is not giving Reeves a vote of confidence.
So while she may have a GDP headline to celebrate, the cost of government borrowing is telling a much less comfortable story.
Wales is Labour’s warning sign
Finally, we discussed the political earthquake in Wales.
For decades, Welsh politics was built around one assumption: Labour would dominate.
That assumption has now collapsed.
Plaid Cymru’s rise and Labour’s collapse in traditional Labour territory show something much deeper than a bad campaign. In parts of the valleys, Labour has not just lost votes. It has lost the sense that it is the natural party of government.
That matters beyond Wales.
If Labour cannot hold its old heartlands in Wales, Starmer should be worried across the UK. Voters who once saw Labour as their default political home are clearly willing to move.
The danger for Starmer is that Wales may be the early warning system for Labour’s wider collapse.
Plaid Cymru now has a major opportunity. If it presents itself as steady and competent, it could become entrenched in Wales in the way the SNP did in Scotland.
For Labour, Wales is no longer a fortress. It is a warning.
The real takeaway
The economy grew. That is true.
But Rachel Reeves should be careful about overselling it.
This was a better GDP number, not a growth miracle. Services did most of the work. Construction is not delivering a building boom. Production remains fragile. Household consumption has improved, but not enough to suggest a consumer surge. Borrowing costs are rising. And Starmer is still reaching for Brexit as an excuse for problems his government now owns.
Labour got its headline. But it has not delivered the growth miracle it promised.
✍️ Jamie Jenkins
Stats Jamie | Stats, Facts & Opinions
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Reference to Wales and Labour’s virtual erasure from the political landscape- finally our fellow citizens recognise Labour’s long term failure under devolution
I would be interested in any data available that compares Wales GDP relative to the 🏴🏴 and Northern Ireland since devolution and in last quarter
You said it Jamie, re Starmer: "That is not serious economics... Blaming Brexit is not a growth strategy." I despair at all this...