Rachel Reeves is accused of 'living under a rock' as economic growth slows to just 0.3%
Output grew only 0.3 per cent between April and June – a sharp slowdown on the previous three-month period when the economy expanded by 0.7 per cent.
The Chancellor boasted that the Office for National Statistics data was 'a strong start to the year'.
But economists and business leaders warned that the expansion was driven by Government spending, while households tightened their belts and corporate investment nosedived.
And it came after the World Bank found that Britain's living standards had fallen behind debt-laden Italy 's for the first time since 2001.
Official data also revealed that productivity – a measure of output per hour worked – has fallen 0.8 per cent since Labour came to power.
That could pose a major challenge to Ms Reeves if it prompts the Office for Budget Responsibility – the UK's fiscal watchdog – to downgrade its forecasts, which would blow an even bigger black hole in the public finances.
She is already preparing to raise taxes in the October Budget as she scrambles to fill a £50billion shortfall. In a further blow to Labour, UK exports to the US have fallen £2billion to a three-year low, despite Sir Keir Starmer's boast that he was the first leader to secure a trade deal with Donald Trump.
And the Government is still struggling to hit its target of making Britain the fastest-growing G7 economy.
Shadow chancellor Mel Stride said the UK was going through a 'summer of uncertainty towards the Budget where inevitably taxes will be heightened still further, still damaging our economy'.
'The Chancellor is living under a rock,' Mr Stride said.
'On Rachel Reeves's watch inflation is up, taxes are up, borrowing is up, growth has stagnated and more tax rises loom. Rachel Reeves is taxing your family's future to fund her failure.'
Stuart Morrison of the British Chambers of Commerce said: 'The numbers mask the underlying pain being felt by businesses across the UK. Tax burdens at home, alongside uncertain global trading conditions, created a very challenging environment for the UK's small and medium enterprises.' He added: 'There must be no more business taxes in the autumn Budget'.
Tina McKenzie of the Federation of Small Businesses, said: 'These figures will be no comfort to small firms.'
Government borrowing jumped to a five-year high of £20.7billion in June while unemployment has risen by more than 200,000 in Labour's first year of government, taking the jobless total to 1.67million.
The downturn has been blamed on Ms Reeves' £25billion raid on employer national insurance, a sharp rise in the minimum wage, and plans to impose new workers' rights.
The Bank of England predicts inflation will reach 4 per cent next month, dashing hopes of a September rate cut.
Ms Reeves insisted the growth figures were 'positive with a strong start to the year and continued growth in the second quarter'. But she admitted that the 'economy has got stuck'.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
25 minutes ago
- Reuters
Melania Trump sends letter to Putin about abducted children
ANCHORAGE, Alaska, Aug 15 (Reuters) - U.S. President Donald Trump's wife, Melania Trump, raised the plight of children in Ukraine and Russia in a personal letter to Russian President Vladimir Putin, two White House officials said on Friday. President Trump hand-delivered the letter to Putin during their summit talks in Alaska, the officials told Reuters. Slovenian-born Melania Trump was not on the trip to Alaska. The officials would not divulge the contents of the letter other than to say it mentioned the abductions of children resulting from the war in Ukraine. The existence of the letter was not previously reported. Russia's seizure of Ukrainian children has been a deeply sensitive one for Ukraine. Ukraine has called the abductions of tens of thousands of its children taken to Russia or Russian-occupied territory without the consent of family or guardians a war crime that meets the U.N. treaty definition of genocide. Previously Moscow has said it has been protecting vulnerable children from a war zone. The United Nations Human Rights Office has said Russia has inflicted suffering on millions of Ukrainian children and violated their rights since its full scale invasion of Ukraine begun in 2022. Trump and Putin met for nearly three hours at a U.S. military base in Anchorage without reaching a ceasefire deal in the war in Ukraine.
BBC News
an hour ago
- BBC News
AntiSocial Asylum hotels
Anger has flared outside hotels used to house asylum seekers. Protestors say they are worried about illegal migration, cost to the taxpayer and a lack of consultation, but one issue seems to spark even more concern - the safety of women and children. Opponents have accused protestors of racism and whipping up hate. Is there any evidence that asylum seekers are more likely to commit sexual offences? We trace the clamour for more data to answer that question. Police have been given new guidance on disclosing the ethnicity and nationality of suspects in criminal cases - especially high profile ones. What might be the effect? And why are so many asylum seekers currently housed in hotels anyway? We hear how the system is supposed to work and how it's evolved. Presenter: Adam Fleming Producers: Simon Tulett, Natasha Fernandes, Emma Close and Tom Gillett Editor: Penny Murphy Production coordinator: Janet Staples Studio engineer: Annie Gardiner
Times
an hour ago
- Times
Times letters: How inheritance tax changes affect growth
Write to letters@ Sir, You argue in your leading article 'From Me to You' (Aug 14) that it is 'morally wrong' to levy inheritance tax on 'those who have worked hard throughout their lives to earn something to pass onto the next generation', but the biggest slice of inherited wealth is in the form of a house sale. The amount of income used to acquire a house depends mainly on the size of the mortgage at the time the house was bought — that is, its historic value — not on what it is sold for as part of probate, its current value. An adjustment for inflation may be appropriate, but there is no reason a house should be tax-exempt because its deceased owner 'worked hard to acquire it'.Peter Curwen Leeds Sir, For Rachel Reeves, wealth is a sin and she intends to tax it like other sinful behaviours. Sin taxes have a long history in reducing activities that politicians disapprove of. Sin taxes on smoking, drinking and driving have succeeded. Inevitably, as our sinning diminishes, so do sin tax revenues. Tobacco and fuel duty revenues are both down. Alcohol duty revenue is up, marginally, but on lower per capita consumption because tax rates on stronger booze have increased. Sin taxes on wealth will have the same result. There will be far less of the sinful activity of wealth creation, and eventually tax revenues will fall. The worst sinners are already fleeing our shores. Inheritance tax revenue will disappear as people stop leaving wealth to their children. As you have reported (Jul 28), capital gains tax revenues are already falling, from £14.6 billion in 2022-23 to £12.1 billion in 2023-34 as the sinners prepare to repent. What's more, with far fewer of the '1 per cent club' who pay 30 per cent of total income tax, we can all look forward to even higher tax bills ReeceLondon N4 Sir, I wonder if Rachel Reeves has fully considered the implications of subjecting pensions to inheritance tax. Having worked for more than 40 years and contributed to a pension in the belief that this would relieve the state of any responsibility for me in old age, I am now confused. Obviously I don't know how long I may live, but in the hope it may be a reasonably long time I have invested in UK stocks and shares, both to protect my family and to promote UK stocks and shares. All of us have benefitted, but now I must re-evaluate. Several of my options include selling the UK stocks and shares. Reeves has said she wants pension funds to invest more in the UK stock market, but how will her policies encourage that?Paul Mitchell Thédirac, France Sir, The proposal to 'tighten' rules on the seven-year exemption to IHT on gifts is odd ('Budget may tighten rules on inheritance tax', Aug 13). We seem to have forgotten the reason for this relief, which is to encourage growth. Essentially, it is better for growth for elderly people to pass on assets to younger people who will use them. A simple example is an older person taking cash from their bank and giving it to their child to buy a house. This results in work for estate agents, surveyors, solicitors and contractors, as well as a tax contribution in stamp duty and VAT. For a pro-growth government, to remove the incentive to give these gifts seems HardsBlakeney, Norfolk Sir, John Stewart says (Thunderer, Aug 13) that the proliferation of cycle lanes on main roads is because priority is given to cyclists making longer trips, at the expense of people using side-roads for shorter journeys. The reason priority is given to main roads is that they are where cyclists are in most danger. In many places outside London, it is impossible to make even short journeys without using main roads. I agree, though, that the design of cycle lanes needs review. Bumps and bollards that separate cycle lanes from vehicle lanes are hazards, as are jay-walking pedestrians and car passengers opening doors without looking. Some cycle lanes at junctions are so labyrinthine that they are difficult for both pedestrians and cyclists to navigate. The sad fact is that at present some cycle lanes are so badly designed that it is often safer, and certainly quicker, to avoid SpenceSale, Cheshire Sir, The residents of Streatham Hill are due to suffer more than a year of roadworks as Transport for London and Lambeth council reduce the motor vehicle capacity of the A23 to a single lane. The reason is that it is safer for cyclists and pedestrians to create a segregated cycle lane with floating bus stops and reduce access from residential side roads. I believe that if they wanted to keep everyone safe — and save money — they could ban cyclists from this stretch of the A23 and direct them to the low-traffic neighbourhood along the southbound carriageway. One of reasons the council gave for creating the LTN was that it would make it safer to cycle and CrillyLondon SW16 Sir, Harry Wallop writes (Business, Aug 15) about the poor prospects for delivery riders in the gig economy. These riders and others in such jobs will, at the end of their working lives, have little if any pension and will be dependent on the state. The people running these companies will have retired comfortably and left taxpayers to look after their former workers. Bill ParishBromley, Kent Sir, Sadly, the stone coffins and skeleton that have been on view in the northeast corner of Sherborne Abbey for the last century cannot be those of Alfred the Great's brothers (letter, Aug 14). They lie immediately beneath a 14th-century tiled pavement, within a chantry chapel, and are more likely to be those of a late-medieval abbot. When they were uncovered, in 1925, during the making of WD Caroe's new Lady Chapel, no archaeologist was there to study or record them. If the present vicar wishes to find the burials of Alfred's brothers, I suggest a careful research excavation on either side of the high Tatton-BrownSalisbury Sir, The discussion about the remains of his family brings into focus the location of Alfred himself. After his death, in 899, he was buried in Old Minster, Winchester. He was then moved to New Minster, the church built by his son, King Edward, as the dynastic focus for the family. The Norman destruction of both minsters led to the building of Hyde Abbey, just outside the walls of the city, as the 'final' resting place for Alfred, Edward and other family members. Sadly, Hyde Abbey fell victim to Henry VIII. Alfred's grave was lost until 1788, when the building of a bridewell on the site led to its rediscovery. The authorities allowed the bones to be lost around the building site. So we can now say with some confidence that the bones of Alfred and his immediate family lie scattered and shattered adjacent to the entrance to River Park in Hyde. We have long lobbied Winchester city council for a proper commemoration of Alfred and the story of the abbey in Hyde Gate, almost the last remaining original building within the abbey FennellFounder, Hyde900Winchester Sir, Further to your article 'Rolls-Royce's UK plans go nuclear' (Business, Aug 14), I have no doubt Rolls-Royce's aero-engine business will remain remarkably successful but its enthusiasm for land-based small modular nuclear reactors (SMRs) is commercially misplaced. Firstly, SMRs are essentially experimental prototype scale-ups. I would be surprised if savvy companies such as Google and Amazon were contemplating reliance on experimental tech. Secondly, authoritative research by academics at the University of Pennsylvania, in a paper published in May 2022, demonstrated that SMR radioactive waste is harder to handle than waste from Gigawatt-sized nuclear David LowryInstitute for Resource and Security Studies, Massachusetts, US Sir, Alice Thomson calls for 'honest but calm dialogue' about migration (Comment, Aug 13). She concedes that 'some Islamic countries don't share western values', but understates in my opinion how big a barrier that is to integration. The schism between Catholicism and Protestantism endured for BickleyHuntingdon, Cambs Sir, In response to your question 'Which artist best captures the true spirit of Britain — in a single frame?', (Times2, Aug 15), surely Banksy's Girl with Balloon, his powerful 2002 mural, best encapsulates the nation's sentiments in these troubled times. It was voted the nation's favourite in 2017 and, as well as being one of his most famous works, it is also one of Banksy's most optimistic, as the original mural was accompanied by the words: 'There is always hope.'Adrian BrodkinLondon N2 Sir, Your excellent article overlooked Walter Sickert. Over his long and prolific career, he painted ordinary British people at the music hall and in grimy bedsits. He reinvented himself more than once and has influenced and inspired many who came later. My choice would be BostonKingshill, Kent Sir, David Hockney has spent a great deal of his time on British landscapes, most notably Garrowby Hill, and his innovative artwork on the iPad is ClarkeRye, E Sussex Sir, Anthony Roberts (letter, Aug 14) brings to mind the warning attributed to Henry Longhurst that 'If you call on God to improve the results of a shot while it is still in motion, you are using an outside agency and subject to appropriate penalties under the rules of golf.'John Murray Compton Chamberlayne, Wilts Sir, A friend of my parents had his bicycle stolen. It was found two days later and, being a good Catholic, he went to church to thank St Anthony. On leaving church, he found that it had been stolen YoungSouthampton Sir, Public statues in London have always been controversial, for many reasons (News, Aug 8, and letters, Aug 13 and 14). In 1937, a decision was made to site the memorials to Admiral Jellicoe and Admiral Beatty in Trafalgar Square, which required moving the statues of General Napier and Major General Havelock, and there had even been discussions about moving William IV from his plinth to an island at Virginia Water. It was all too much for Sir Patrick Duff, secretary of the Office of Works, who was still reeling after controversies about the statue of Field Marshal Haig on Whitehall. In a letter to the first commissioner, Sir Philip Sassoon, in January 1938, Duff fumed that the best site for all statues was at the bottom of the CrellinThorner, W Yorks Sir, Marion Brown's letter (Aug 13) revived an old misapprehension of my own. As a child I had a box of watercolour paints with the printed name of the tint under each pan. Owing to inconsistency in the printing I was convinced for many years of the existence of the colour Clive DorrPlymouth Write to letters@
