LONDON (AP) — The British economy stagnated in the third quarter of the year, as per newly revised official figures released on Monday, dealing another setback to the new Labour government which has prioritized economic growth as its primary objective.
In the latest update for the period spanning July to September, the Office for National Statistics reported that the British economy exhibited zero growth, down from the previous estimate of 0.1%. This downward revision was partially attributed to recent survey data indicating subdued activity in the bars and restaurants sector.
Critics have seized on this revision to argue that Labour’s rhetoric prior to assuming power on July 5, after a hiatus of 14 years, painted an overly pessimistic picture of the economy. At that time, the Labour administration had characterized its economic legacy from the preceding Conservative government as the bleakest in generations.
Treasury chief Rachel Reeves, who pledged to accelerate economic growth following Labour’s victory in the July election, now finds herself grappling with a stagnant economy over the three-month period ending in September. Earlier official figures released this month also indicated a 0.1% contraction in economic activity during October.
Addressing the economic challenges, Reeves remarked, “The task before us to rectify our economy and adequately finance our public services after years of neglect is monumental.”
In her inaugural budget presentation in late October, Reeves implemented tax hikes on businesses in an effort to bolster public finances and support struggling services. Nonetheless, numerous economists argue that these tax increases have further harmed the British economy, prompting many businesses to respond by raising prices or cutting staff and wages.
Mel Stride, the economic spokesperson for the Conservative party, cautioned that “warning signs are flashing” in the economy. He observed, “Having taken charge of the G-7’s swiftest-growing economy, growth has plummeted under Labour’s stewardship.”
The economic slowdown raises concerns about the future trajectory of the British economy and the effectiveness of the policy measures being pursued to spur growth and stabilize public finances. The ongoing economic challenges are likely to remain at the forefront of the political and economic discourse as the government and opposition navigate the evolving economic landscape.
