CHANCELLOR Rachel Reeves’s Budget will create short-term economic growth at the cost of higher inflation and lower wages, researchers say.

An increase in government spending will see growth shoot up to 1.3 per cent in 2025 before falling slightly to 1.2 per cent in 2026, said a think tank report published today.

The boost, however, may only be short term and is likely to reduce growth in the future, warned the University of Strathclyde’s Fraser of Allander Institute.