RACHEL Reeves received a pre-Budget blow as the UK economy has slowed down.
The Chancellor now facing huge pressure after growth was lower than what economists had forecast – and comes ahead of Budget tax hikes.
She said this morning that she will make “fair decisions” on November 26 amid speculation income tax will be hiked.
A marked downturn in car production following the cyber attack at Jaguar Land Rover saw a big dip in car production.
The construction and services sector were also weaker than the previous quarter.
Figures released from the Office of National Statistics showed growth was up by 0.1 per cent.
It comes after experts had expected to be 0.2 per cent in the three months from July to September.
It was down from 0.3 per cent which was recorded for the previous three months.
The economy declined by 0.1 per cent in September, official figures show.
Ms Reeves this morning said: “We had the fastest-growing economy in the G7 in the first half of the year, but there’s more to do to build an economy that works for working people.
“At my budget later this month, I will take the fair decisions to build a strong economy that helps us to continue to cut waiting lists, cut the national debt and cut the cost of living.”
Blow ahead of Budget
by Adele Cooke
GDP measures the economic output of companies, individuals and Governments
If it is rising steadily but not too much then it is a sign of a healthy and prosperous economy.
This is because it usually means that people are spending more, so the Government gets more money in tax and businesses make more money, which then means pay rises for workers.
The Bank of England (BoE) also uses GDP and inflation as key indicators to determine the base rate.
This decides how much it will charge banks to lend them money and is a way to try to control inflation and the economy.
If GDP is low, the BoE cuts its base rate in order to encourage people to spend and invest money.
But if it is high the BoE may keep its base rate higher in order to keep inflation under control.
But Alice Haine, personal finance expert at Bestinvest by Evelyn Partners, said the figures will deliver a blow to the Chancellor ahead of the Budget.
She added: “It will also do little to ease the financial strain facing households.
“Reeves has warned that tax rises are inevitable and that everyone ‘must do their bit’ to help restore the public finances – a message likely to send shivers through households already grappling with higher bills and tighter budgets.”
But Shadow Chancellor Sir Mel Stride said: “Today’s ONS figures show the economy shrank in the latest month, under a Prime Minister and Chancellor who are in office but not in power.
“Months after the Prime Minister stripped the Chancellor of responsibility for the Budget, Keir Starmer has now lost control of his own Downing Street operation – with his team openly at war with his Cabinet.
“If the Prime Minister does not have the backbone to control his team, he has no hope of reducing spending.
“Only the Conservatives have a leader with a backbone and a plan to deliver £47 billion of savings – allowing us to cut tax and cut the deficit under our Golden Economic Rule.”
Shadow Business Secretary Andrew Griffith added that the government must now rule out tax rises and rip up proposed workers’ rights laws to help growth.
He said: “With GDP, investment and manufacturing all down, growth is as absent as the phantom plots the Prime Minister frets about.
The government must rule out tax rises and shelve its disastrous Unemployment Bill today.”
Lib Dem Treasury Spokesperson Daisy Cooper said: “This is a damning indictment of Labour’s disastrous decisions.
“From the jobs tax to business rates bills, the economy is barely spluttering along.
“The Chancellor must take up our plans for an emergency package to save our high streets, put money back in the pockets of families and finally fix our broken relation with Europe to bring in billions for our public services.”
