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Rishi Sunak suffered a setback as revised figures showed the UK economy performed worse than previously thought and contracted between July and September.
The Prime Minister made growing the economy one of his top five promises to voters at the start of the year.
In a fresh setback to the Tory leader's goal, the official statistics agency has downgraded its estimates of Britain's economic output this year.
The Office for National Statistics (ONS) said gross domestic product (GDP) fell 0.1 percent in the three months to September, down from a previous estimate that it had been flat.
And it said Britain recorded no GDP growth at all between April and June, compared with a previous estimate of 0.2 percent.
Labor criticized Mr Sunak's “legacy of failure” and promised Sir Keir Starmer would revive Britain's fortunes.
Shadow chancellor Rachel Reeves said: “Rishi Sunak has failed to beat Liz Truss, he has failed to cut waiting lists, he has failed to stop the boats and now he has failed to stimulate the economy .”
Rachel Reeves said Rishi Sunak's legacy is 'a legacy of failure'
(PA cable)
She added: “Thirteen years of economic failures under the Conservatives have left working people worse off, with higher bills, higher mortgages and higher prices in stores.”
But Jeremy Hunt said the outlook for the UK economy was “far more optimistic than these figures suggest”. The Chancellor pointed to a further fall in inflation this week and said tax cuts announced in his autumn statement would boost economic growth.
Mr Sunak said: “Of course we want more growth” but said the UK economy had “performed better” than forecast at the start of 2023, stressing that Britain had grown faster than some other European countries.
The Prime Minister also welcomed national insurance tax cuts planned in January. “Because we've done a good job of fighting inflation, we can now cut taxes for families, and this tax cut is significant,” he told reporters. “This will help put more money in the pockets of families across the country.”
Chancellor Jeremy Hunt stressed that the UK's outlook was “far more optimistic than these figures suggest”.
(Getty Images)
Mr Hunt said 2024 should be the year “we have to shed our pessimism and our decline” – as he pointed out that better-than-expected inflation numbers should enable the Bank of England to cut interest rates early next year .
The Chancellor told the Financial Times: “If we can stick to our course and bring inflation down, there is a realistic chance that the Bank of England could decide to start cutting interest rates.”
The Trades Union Congress (TUC) said growth figures were “bleak” and the UK was now stuck in a “doom loop” and was “on the brink of recession”.
Union leader Paul Nowak said: “It cannot continue like this. “Our economy is stuck in a doom loop and working people are paying the price as unemployment rises and living standards fall.”
The recent fall in GDP was due to a decline in the services sector, the ONS said, which includes retail and hospitality, among others.
The latest figures mean that, apart from overseeing a halving of the inflation rate, the Prime Minister ends the year having failed to deliver on all his other promises; Stop small boat Channel crossings, reduce national debt, cut NHS waiting lists and grow the economy.
Earlier this week, Mr Sunak tried to go back on his promise to “stop the boats” by insisting there was no “fixed date” for the promise.
Responding to criticism from Parliament's powerful Liaison Committee, Mr Sunak said he had no “exact date” when border crossings would end. “We will keep going until that happens [stop the boats],” he insisted.
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