2 days ago
BREAKING NEWS Rachel Reeves' spending splurge plans are ALREADY in chaos after GDP fell 0.3% in April - fuelling fears she WILL have to hike taxes
' spending plans have already been thrown into chaos today after figures showed the economy tumbling into the red.
GDP was down 0.3 per cent in April, worse than analysts had expected, and raising more questions about the realism of the Chancellor's splurge on services.
Although UK plc has still grown over the past three months, evidence has been mounting of a slowdown. Ms Reeves admitted the data - which coincide with the huge national insurance tax raid on businesses taking effect - were 'disappointing'.
ONS Director of Economic Statistics Liz McKeown said: 'The economy contracted in April, with services and manufacturing both falling. However, over the last three months as a whole GDP still grew, with signs that some activity may have been brought forward from April to earlier in the year.
'Both legal and real estate firms fared badly in April, following a sharp increase in house sales in March when buyers rushed to complete purchases ahead of changes to Stamp Duty. Car manufacturing also performed poorly after growing in the first quarter of the year.
'In contrast April was a strong month for construction, research and development and retail, with increases in these only partially offsetting falls elsewhere.
'After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs.'
In the Spending Review yesterday, Ms Reeves set out plans to 'invest' a staggering £4trillion to fund 'the renewal of Britain'.
She said the plans, which include another huge dollop of cash for the NHS, would end the 'destructive' austerity of the last government and boost economic growth.
Labour strategists hope the costly gamble will pay off by cutting hospital waiting lists, improving the creaking infrastructure and pump-priming the economy.
But experts warned the scale of the spending, coupled with the deteriorating public finances, would force another round of damaging tax rises this autumn.
The Conservatives accused Ms Reeves of adopting a reckless 'spend now, tax later' approach.
The Chancellor insisted her plans could be funded by the eye-watering tax rises she imposed last year. She refused to rule out tax rises this autumn, saying only that taxes 'won't have to go up to pay for what's in this Spending Review'.
But the small print of yesterday's Treasury document already includes one significant new tax hike, with the Chancellor pencilling in council tax hikes that will add more than £350 to an average Band D bill by 2029 to help fund local services and the police.
Asked to rule out further tax rises, Treasury minister Emma Reynolds said: 'I'm not ruling it in, I'm not ruling it out.'
