UK ‘on recession watch’ under Labour: GDP falls for second month in a row with Rachel Reeves ‘disappointed’ at 0.1% drop in October… while businesses warn of hammer blow from Budget_Nhy
Fears are mounting for the British economy today after a second consecutive month of falling GDP.
Activity was down 0.1 per cent in October, after recording the same reduction in September.
That was far worse than the 0.2 per cent growth analysts had pencilled in, and the first contraction in successive months since the height of Covid.
Although UK plc was still marginally in positive territory over the quarter, businesses voiced alarm that the impact of Labour’s Budget tax raid has yet to be felt and demanded a rethink.
Economists said Britain is on ‘recession watch’, while even Chancellor Rachel Reeves admitted the official figures were ‘disappointing’.
The grim numbers could give the Bank of England pause for thought as it decides what to do on interest rates next week – although the MPC is widely expected to keep the level on hold.
ONS Director of Economic Statistics Liz McKeown said: ‘The economy contracted slightly in October, with services showing no growth overall and production and construction both falling.
Chancellor Rachel Reeves admitted the official figures were ‘disappointing’
‘Oil and gas extraction, pubs and restaurants and retail all had weak months, partially offset by growth in telecoms, logistics, and legal firms.
‘However, the economy still grew a little over the last three months as a whole.’
Ms Reeves said: ‘We are determined to deliver economic growth as higher growth means increased living standards for everyone, everywhere.
‘This is what our Plan for Change is all about. ‘While the figures this month are disappointing, we have put in place policies to deliver long term economic growth.
‘We have put public finances back on a stable footing, capped the rate of corporation tax at the lowest level in the G7, established a £70billion National Wealth Fund to drive growth in our towns and cities, launched a 10 year infrastructure strategy and are creating pension mega funds to boost investment in British businesses, infrastructure and clean energy.’
But shadow chancellor Mel Stride said: ‘It is no wonder businesses are sounding the alarm. This fall in growth shows the stark impact of the Chancellor’s decisions and continually talking down the economy.
‘Labour were left the fastest growing economy in the G7 but because of their decisions growth is now under serious pressure.
‘The impact will be felt by families through higher taxes, fewer jobs, higher prices and higher interest rates.’
Julian Jessop, Economics Fellow at free-market think-tank the Institute of Economic Affairs, said: “The second successive monthly fall in economic activity in October should put the UK firmly on recession watch. Indeed, output per head may already be falling for the second quarter in a row.
“The loss of momentum is not contained to the UK. Indeed, the manufacturing sector appears to be struggling even more in the rest of Europe, notably Germany and France.
“Nonetheless, the new government’s negative rhetoric over the summer and the anticipation of a tight Budget have damaged sentiment and encouraged many households and business to put spending, hiring and investment on hold.
Isaac Stell, Investment Manager at Wealth Club, said: ‘These latest figures will send a chill through the corridors of Westminster, as the Government’s growth agenda looks increasingly at risk and almost certainly opens the door to the possibility of one final rate cut before the year is out.’
