Labour has been warned that the UK is on the brink of a recession and the economy is fast heading for “the worst of all worlds.”
According to the Office for National Statistics (ONS) there was no GDO growth between July and September prior to the Autumn Budget.
Economist had estimated there would be an estimated 0.1% growth in the quarter and for October, November and December the Bank of England governor Andrew Bailey is expecting no growth at all.
Lucy Powell the leader of the House of Commons admitted the economy is “disappointing” and claims that the government is “starting to turn the oil tanker around.”
According to the CBI on Monday the private sector firms expect activity to fall in the three months to March (weighted balance of -24%), according to the CBI’s latest Growth Indicator. Expectations are now at their weakest in over two years.
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This pessimism was shared across all sub-sectors. Business volumes in the services sector are anticipated to decline (-18%), driven by predicted falls in both business and professional services (-13%) and consumer services (-37%). Distribution sales are expected to fall steeply (-35%), and manufacturers also anticipate output to fall (-31%), with expectations at their weakest since May 2020.
The disappointing outlook comes as private sector activity fell again in the three months to December, at a faster pace than in the three months to November (-21% from -13% in November). Activity has been flat or falling since August 2022.
Andrew Griffith, conservative business spokesman blasted that the Chancellor has created “a hostile climate for aspiration, for investment, and for growth.”
He said, “The Chancellor’s tax-raising spree and trash-talking her economic inheritance is literally killing businesses and jobs.
“If there is a recession – and based on these CBI expectations that seems increasingly likely – it will be one made in Downing Street. Labour need to urgently change course before the damage they are doing becomes even greater.”
Alpesh Paleja, the Confederation of British Industry (CBI) interim deputy chief economist said, “There is little festive cheer in our latest surveys, which suggest that the economy is headed for the worst of all worlds – firms expect to reduce both output and hiring, and price growth expectations are getting firmer.
“Businesses continue to cite the impact of measures announced in the Budget – particularly the rise in employer National Insurance contributions (NICs) – exacerbating an already tepid demand environment.
“As we head into 2025, firms are looking to the government to boost confidence and to give them a reason to invest, whether that’s long overdue moves to reform the apprenticeship levy, supporting the health of the workforce through increased occupational health incentives or a reform of business rates.
“In the longer term, businesses will be looking to the industrial strategy to provide the stability and certainty which can unlock innovation and investment – and provide that much needed growth for the economy which can deliver prosperity for firms and households alike.”
Liz McKeown, ONS director of economic statistics said, “The economy was weaker in the second and third quarters of this year than our initial estimates suggested with bars and restaurants, legal firms and advertising, in particular, performing less well.
“The household saving ratio fell a little in the latest period, though remains relatively high by historic standards. Meanwhile, real household disposable income per head showed no growth.”
