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The UK economy failed to grow in the third quarter, according to the latest official figures, in a fresh blow to the Labor government.
The Office for National Statistics said on Monday that gross domestic product recorded no growth in the three months to September, down from its first estimate of 0.1 per cent growth.
The economy declined, with the dominant services sector stagnating in the quarter. Production output fell by 0.4 percent, offsetting a 0.7 percent increase in the construction sector.
These numbers represent a setback for the government, which has placed promoting economic growth at the heart of its agenda. Surveys have pointed to the chilling effect of Chancellor Rachel Reeves' tax-hike Budget in October, which damaged business confidence and dampened hiring intentions.
Reeves admitted on Monday that the government faced a “huge” challenge but insisted the budget laid the foundations for long-term growth.
If growth is lower than forecasts in the Budget, it raises the possibility that Reeves will need to cut spending or raise taxes next year to ensure it continues to meet its borrowing rules.
“The challenge we face to repair our economy and properly fund our public finances after 15 years of neglect is enormous,” Reeves said. “But this only fuels our fire to serve working people.”
Last week, Andrew Griffiths, the shadow business secretary, claimed the UK was heading towards a “January of discontent” and the possibility of a recession. He said that if there was a recession it would be “made in Downing Street”.
