Blow for Rishi Sunak as revised GDP figures show economy in reverse

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Rishi Sunak suffered a blow as revised figures confirmed the UK economic system performing worse than beforehand thought, shrinking between July and September.

The prime minister made rising the economic system one in every of his 5 key pledges to voters in the beginning of the 12 months.

In recent setback to the Tory chief’s goal, the official statistics watchdog downgraded its estimates of Britain’s financial efficiency this 12 months.

The Workplace for Nationwide Statistics (ONS) stated gross home product (GDP) fell by 0.1 per cent within the three months to September, down from an earlier estimate that it had flatlined.

And it stated from April to June Britain skilled no GDP development in any respect, in contrast with an earlier estimate of a 0.2 per cent rise.

Labour lashed out at Mr Sunak’s “legacy of failure” and promised Sir Keir Starmer would revive Britain’s fortunes.

Shadow chancellor Rachel Reeves stated: “Rishi Sunak did not beat Liz Truss, he failed to chop ready lists, he did not cease the boats and now he has did not develop the economic system.

She added: “13 years of financial failure below the Conservatives have left working folks worse off, with greater payments, greater mortgages and better costs within the outlets.”

However Jeremy Hunt stated the outlook for Britain’s economic system “is much extra optimistic than these numbers counsel”. The chancellor pointed to an additional fall in inflation this week and stated tax cuts introduced in his autumn assertion would increase financial development.

Mr Sunak stated “after all we need to see extra development” – however stated the UK economic system has “carried out higher” than predicted at begin of 2023, and insisted that Britain has grown quicker than another European international locations.

The PM additionally hailed nationwide insurance coverage tax cuts on the best way in January. “As a result of we’ve carried out a very good job having inflation, we’re in a position to now lower taxes for households, and that tax lower is critical,” he informed reporters. “That can assist put more cash within the pockets of households up and down the nation.”

Mr Hunt has stated 2024 needs to be the 12 months when “we have to throw off our pessimism and declinism” – as he prompt higher than anticipated inflation figures meant the Financial institution of England ought to have the ability to lower rates of interest early subsequent 12 months.

The chancellor informed the Monetary Instances: “There’s an inexpensive probability that if we stick with the course we’re on, we’re in a position to carry down inflation, the Financial institution of England would possibly resolve they will begin to scale back rates of interest.”

The Trades Union Congress (TUC) stated the expansion figures have been “dismal” and Britain is now caught in a “doom loop” and “teetering on the point of recession”.

The uinion chief Paul Nowak stated: “We are able to’t go on like this. Our economic system is caught in a doom loop and dealing persons are paying the value as unemployment rises and residing requirements fall.”

The most recent fall in GDP was pushed by a drop-off within the providers sector, the ONS stated, which incorporates issues like retail and hospitality.

The most recent figures imply that, except for overseeing a halving within the price of inflation, the PM ends the 12 months having failed on all of his different pledges; stopping small boat channel crossings, decreasing nationwide debt, reducing NHS ready lists and rising the economic system.

Earlier this week Mr Sunak tried to row again on his pledge to “cease the boats”, insisting there isn’t any “agency date” on the promise.

Grilled by parliament’s highly effective liaison committee, Mr Sunak stated he doesn’t have “a exact date” for when the crossings will cease. “We’ll maintain going till we do [stop the boats],” he insisted.