There was more evidence the UK economy is performing strongly today – despite Rachel Reeves preparing to paint a grim picture of the public finances.

Closely-watched PMI figures showed activity expanding in the private sector this month, with levels of new business hitting a 15-month high.

The manufacturing sector was also growing at the fastest rate in more than two years, with S&P Global’s Chris Williamson saying the data revealed a ‘welcoming picture for the new Government’.

However, the Chancellor will play up the misery in a crucial intervention next week before Parliament goes into its summer break.

Ms Reeves is expected to lay out the results of a review of the government books, highlighting big ticket costs such as Post Office and Infected Blood compensation.

There is speculation she could warn there is a black hole of £50billion in the finances, paving the way for tax increases.

Although Keir Starmer has ruled out changes to income tax, national insurance and VAT, the Tories have cautioned he has left a range of options open for raising revenue.

There was more evidence the UK economy is performing strongly today – despite Rachel Reeves preparing to paint a grim picture of the public finances

Closely-watched PMI figures showed activity expanding in the private sector this month, with levels of new business hitting a 15-month high

Slashing tax reliefs on pension contributions and overhauling council tax bands are among moves that have been floated. The tax burden is already running near a post-war high.

The balancing act Sir Keir faces was laid bare last night as he suffered his first revolt on calls to scrap the two-child cap on benefits.

Just a fortnight after securing his historic election landslide, Sir Keir was defied by seven MPs who wanted to splurge around £2.5billion a year on the move.

The premier’s brutal response of suspending the group – including prominent left-wingers John McDonnell, Richard Burgon and Rebecca Long Bailey – sparked an outcry in his own ranks.

One of the rebels put on ice for six months, Zara Sultana, suggested this morning that Sir Keir had treated the situation like a ‘macho virility test’. She declared she had ‘slept well’ after voting to scrap the limits on handouts for big families.

The president of the TUC said the rebels ‘spoke for millions of trade union members and many Labour Party members’. 

A Corbynite campaign group branded him ‘Sir Kid Starver’ on social media, while even supporters warned that he is sitting on a ‘timebomb’.   

Despite ministers hinting that they will move to ditch the two-child cap as soon as possible, a further 40 Labour MPs abstained on a King’s Speech amendment tabled by the SNP.

The flash UK composite PMI reported a reading of 52.7 in July, up from 52.3 in June. Any score above 50 on the index represents expansion.

It came in slightly above the expectations of economists who had pencilled in a reading of 52.5 for the latest survey.

Although Keir Starmer has ruled out changes to income tax, national insurance and VAT, the Tories have cautioned he has left a range of options open for raising revenue