So what’s there to high-five about now, Ms Reeves? Critics blast Chancellor’s tax and spend plans – as it emerges the economy SHRANK by 0.03 per cent
Rachel Reeves’ plan to renew the British economy was left in tatters yesterday after figures revealed it was slamming into reverse.
The Office for National Statistics said gross domestic product shrank by 0.3 per cent in April – the worst monthly performance for a year and a half.
It came less than 24 hours after the Chancellor declared that only Labour could fix Britain as she set out the Government’s spending plans.
Yesterday she admitted that the latest numbers were ‘clearly disappointing’.
Yet much of the blame for the slump was laid squarely at her own door – with firms pointing to the impact of Ms Reeves’ £25billion raid on employer national insurance.
Donald Trump’s tariff wars and the end of a stamp duty holiday also took their toll.
It added to the growing sense of disenchantment with Labour’s handling of the economy as firms also face higher business rates and a raft of new workers’ rights.
The figures will knock the wind out of the Chancellor’s sails after the UK had appeared to enjoy a much brighter start to the year, with GDP growing by 0.7 per cent in the first quarter – the fastest pace among the G7 group of advanced economies.
The Chancellor of the Exchequer Rachel Reeves visits the Nuclear Skills Academy, University of Derby, where she was introduced to staff and apprentices
The chancellor’s plan to renew the British economy was left in tatters yesterday after figures revealed it was slamming into reverse
Tory business spokesman Andrew Griffith said: ‘It’s bad news that growth has fallen but when you introduce a £25billion jobs tax, hike business rates, drive investors overseas and spawn hundreds of pages of red tape, lower growth is precisely what you get.
‘You can’t tax and spend your way to growth. The quicker this socialist Government wakes up to that, the better.’
Separate figures today from the Recruitment and Employment Confederation showed the number of those seeking jobs has seen the biggest increase in four and a half years, as redundancies surge and work opportunities shrink.
And evidence mounted that entrepreneurs are becoming fed up with Labour’s anti-business policies, as a survey from accountancy firm S&W showed 39 per cent were considering moving their companies abroad because a lack of support.
It came as Tesco, Britain’s biggest supermarket, said costs being piled on to it by the Government were resulting in higher prices for consumers.
‘There are definitely continued inflationary pressures on the market,’ said chief executive Ken Murphy.
‘I think you’ve got to look at things like the impact of all the new taxation and regulatory costs on the industry.’
The downturn in April was the worst since October 2023 and bigger than the 0.1 per cent contraction expected by economists.
Ms Reeves presented her Spending Review to members of Parliament after the weekly session of Prime Minister’s Questions on Wednesday
Tory business spokesman Andrew Griffith said: ‘You can’t tax and spend your way to growth. The quicker this socialist Government wakes up to that, the better’
Tesco CEO Ken Murphy said costs being piled on to it by the Government were resulting in higher prices for consumers
The figures covered a period when President Trump introduced his ‘Liberation Day’ tariffs that caused a wave of market turbulence and upended decades of global trading arrangements.
They showed a £2billion slump in UK goods exports to the US, the biggest fall on records going back to 1997.
There was also a big drop in output from the car industry – one of the sectors worst affected by tariffs.
And the end of the stamp duty holiday took its toll as a surge in market activity at the start of the year, as buyers rushed to beat the deadline, screeched to a halt.
The deteriorating picture will only add to fears that the Chancellor will raise taxes again this autumn.
It follows figures earlier this week showing the economy has lost more than a quarter of a million jobs since her last Budget.
Suren Thiru, of the Institute of Chartered Accountants in England and Wales, said: ‘These figures suggest that the UK’s economic fortunes took a notable nosedive in “Awful April”.
‘April’s decline is probably the start of a more sobering period for the UK economy with the damage from spiralling costs and intensifying global uncertainty set to slow growth sharply this quarter.
Weaker growth makes generating the revenue Government needs to support its sizable spending plans more difficult, increasing the chances of further tax rises in the autumn Budget.’
