By Angela Green: Latest economic data points to urgent need to address a legacy of underinvestment.
Britain’s economy in October followed September’s, shrinking again by 0.1%, underlining the scale of the government’s primary task to get the economy growing. Figures released today from the Office for National Statistics showed another fall in GDP, a consequence of decline in the previously robust services sector.
Economists had largely predicted modest growth of 0.1%, but the figures released this morning show that optimism was misplaced, businesses are in reality struggling.
The Prime Minister rather bullishly said last week it was the government’s aim to make the UK the fastest-growing G7 economy, his chancellor’s budget seems to have curtailed that vision as its impact continues to stifle belief in growth. With higher NI tax to pay many businesses will slow investment spending and hiring people to stimulate growth.
The chancellor, Rachel Reeves this morning has spoken with news outlets labelling the figures as “disappointing” and continuing to insist Labour is directing the economy for growth. Last week figures showed the UK services sector slowing to its lowest rate in more than a year. Promises will not pay bills and bills need to be paid.
The inheritance of an economy in tatters following a lack of investment over fourteen years of inept housekeeping limits attempts to fix it. Our still relatively new government have ridden that wave for five months now, and undoubtedly it restricts movement as holes need to be filled.
Following this mornings economic update, Kate Nicholls, Chief Executive of UKHospitality, said: “Today’s figures are extremely worrying and show just how fragile the UK economy remains.
“The economy shrinking in October reflects a concerted slump in consumer, business and investor confidence. This was before the Budget, which dealt businesses yet more costs, the consequences of which are still to come.
“The changes to employer NICs, particularly the lowering of the threshold, hits hospitality disproportionately hard and has already slammed the brakes on any investment decisions, which are much-needed to drive growth.
“We are continuing to urge the Government to rethink its decision to go ahead with this damaging change in its current form, and instead work with industry on alternatives that mitigate the impacts on businesses, team members and economic growth.”
The latest economic data paints a grim picture of Britain’s recovery efforts, highlighting the challenges the government faces in stimulating growth. Despite optimistic projections, the country’s economic stagnation, exacerbated by a slowing services sector and fiscal policies that seem to stifle investment, has raised doubts about the feasibility of achieving the Prime Minister’s ambitious growth targets. With businesses struggling under higher taxes and uncertainty, the path to revitalising the economy remains unclear. As Labour continues to push for growth-focused strategies, the government must address the legacy of underinvestment and create an environment conducive to long-term stability and prosperity.
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