Rachel Reeves was hit with more grim news today as figures showed the economy flatlined in July.
UK plc was at a standstill in the month, in more evidence of a slowdown that could heap more trouble on the Chancellor.
Although there was a 0.2 per cent expansion over the past three months, fears are mounting that Ms Reeves will have a big hole in the public finances to fill at the Budget on November 26.
Labour MPs have been clamouring for a ‘wealth tax’ to raise billions of pounds more, although Ms Reeves has warned the idea is ‘unproven’.
The spiking costs of servicing the country’s debt mountain and extra spending demands have been adding to the difficulties for the government.
Analysts have warned that the Bank of England is unlikely to bail out the government by cutting interest rates this month, with inflation rising.
The economy was at a standstill in July, in more evidence of a slowdown that could heap more trouble on the Chancellor
Although there was a 0.2 per cent expansion over the past three months, fears are mounting that Rachel Reeves (pictured) will have a big hole in the public finances to fill at the Budget on November 26
Production has been dragging back the economy over the most recent three month period
ONS Director of Economic Statistics Liz McKeown stressed that the three-month figures were less volatile than single-month.
‘Growth in the economy as a whole continued to slow over the last three months. While services growth held up, production fell back further,’ she said.
‘Within services, health, computer programming and office support services all performed well, while the falls in production were driven by broad based weakness across manufacturing industries.
‘In the latest month GDP showed no growth, with increases in services and construction offset by falls in production.’
A Treasury spokesman said: ‘We know there’s more to do to boost growth, because, whilst our economy isn’t broken, it does feel stuck.
‘That’s the result of years of underinvestment, which we’re determined to reverse through our Plan for Change.
‘We’re making progress: growth this year was the fastest in the G7; since the election, interest rates have been cut five times, and real wages have risen faster than they did under the last government.’
Shadow chancellor Mel Stride said: ‘Any economic growth is welcome – but this Government is distracted from the problems the country is facing.
‘While the Government lurch from one scandal to another, borrowing costs recently hit a 27-year high – a damning vote of no confidence in Labour that makes painful tax rises all but certain.
‘It is little wonder that Starmer has stripped Reeves of control over the budget. But sidelining her is not enough – he must also reject her failed economic approach that has left Britain poorer.’
