Rachel Reeves calls ‘challenge’ of turning around economy ‘enormous’ – The Irish News

Chancellor Rachel Reeves described the “challenge” of turning around the economy as “enormous”, after revised official figures showed the UK economy was stagnant in the third quarter of the year.

The Office for National Statistics said on Monday that the UK’s gross domestic product (GDP) showed no growth between July and September.

The Conservatives claimed that “growth had collapsed” under government “watch” and that the economy was becoming “more vulnerable”.

Statisticians, who previously estimated 0.1% growth for the quarter, partly blamed the reduction on new survey data showing slowing trading at bars and restaurants.

The ONS also revised its growth figure for the second quarter of 2024 downward to 0.4%. In September he said he estimated that GDP had grown by 0.5%, which itself represented a reduction from previous estimates.

The figures will come as a blow to ministers who have pledged to grow the economy, and come as businesses have issued a warning that the UK is “heading towards the worst of all worlds”.

Reacting to the figures released on Monday morning, Ms Reeves said in a statement: “The challenge we face in repairing our economy and properly funding our public finances after 15 years of neglect is enormous.

“But this only fuels our desire to meet workers’ expectations.

“The budget and our plan for change will generate long-term sustainable growth, putting more money in people’s pockets through increased investment and relentless reforms. »

The figures published on Monday cover the July-September period, before the Chancellor’s first budget tabled at the end of October.

They follow figures released earlier in December which showed the UK economy contracted unexpectedly in October, marking two months of negative growth for the first time since the pandemic.

Mel Stride, the shadow chancellor, said “warning lights are flashing” about the economy.

“Having inherited the fastest growing economy in the G7, growth has collapsed under Labor leadership,” Mr Stride said in reaction to Monday’s data.

“This means increased pressure on our public finances and an economy which, far from becoming more secure, is becoming significantly more vulnerable.

“The Labor government must now urgently review its disastrous budget and align its economic policy with growth, not decline. Each moment of delay further harms business confidence, production and employment.

“The lights are flashing.”

The CBI’s acting deputy chief economist says the “economy is heading for the worst of all worlds” after a major investigation that contains “a bit of festive cheer”.

They found that companies expected to reduce both production and hiring. The Chancellor’s increase in employers’ national insurance, which is expected to raise around £25 billion a year, has been highlighted as one reason for the gloomy outlook.

The CBI Growth Indicators Survey, based on responses from 899 companies between November 25 and December 12, found that growth expectations are now at their lowest level since November 2022, following the Liz Truss’ chaotic tenure at No.10.

Alpesh Paleja, CBI acting deputy chief economist, said: “There is little festive cheer in our latest surveys, which suggest the economy is heading for the worst of all worlds – businesses are expecting to reduce both their production and hiring, as well as their expectations for price growth. become firmer.

“Businesses continue to cite the impact of measures announced in the Budget – particularly the increase in employer NICs – which have exacerbated an already lukewarm demand environment.

“As 2025 approaches, businesses are looking to the government to build confidence and give them a reason to invest, from long-awaited measures to reform the apprenticeship levy to support for workforce health through increased occupational health incentives or reform. professional rates.

“In the longer term, businesses will look to industrial strategy to provide the stability and certainty that can unlock innovation and investment – ​​and deliver the much-needed growth to the economy that can bring prosperity to businesses and households. »