Economists, finance and business leaders warn Britain risks sliding into recession amid rising business taxes and prices.
News that the UK economy saw growth of just 0.1 percent in Gross Domestic Product (GDP) in November suggests the UK is flatlining.
Critics complain that if the UK economy was measured in terms of output per head of population, it would have shown a reversal.
Concerns about rising National Insurance taxes on employers from Rachel Reeves’ poorly received Budget, along with higher energy and food prices, are hitting business and consumer confidence.
Economics Fellow at the Institute of Economic Affairs Julian Jessop said the best scenario Britain can hope for is “stagflation light” with little or no growth and inflation running at above the Bank of England target of 2 percent.
“The latest monthly data suggest that the UK economy is sliding back into recession,” he said.
“GDP rose a measly 0.1 percent in November or, more precisely, just 0.07 percent, which reversed less than half of the falls in the previous two months.
“The best we can hope for now is that GDP was flat in the fourth quarter as a whole. Even this would require a stronger December, which looks unlikely given the weakness in the business surveys.”
He added: “The UK is not yet in recession in terms of overall GDP, but output per head did fall in the third quarter of last year and almost certainly did so again in the fourth.
“The most likely scenario is still a shallow downturn, with inflation only rising a little further and unemployment remaining relatively low. This could best be described as ‘stagflation-lite’.
“The government needs to come up with a credible plan to solve the productivity puzzle, rather than simply double-down on the current policies of more tax, more public spending, and more state intervention.”
Matt Swannell, Chief Economic Advisor to the EY ITEM Club, offered a more positive verdict, saying “the conditions are in place to see the UK return to steady, if unspectacular, growth across 2025.
“Decent real income growth and lower levels of consumer caution should support household spending, and there are reasons to believe global growth will continue at a decent pace.”
But he said the impact of the budget is likely to play a part in “preventing a stronger pickup in the UK economy”.
Rakesh Dua, CEO at DUA Accountancy & Business Consultancy, said: “Mood in the business community has been decimated due to current government policy.
“The business owners I speak to are asking why they should take risks, why carry on hiring, why invest when growth is not there, and why take on more fixed costs. They’re also wondering whether their customers will accept further price rises. Confidence is in extremely short supply.”
David Belle, Founder and Trader at Fink Money, told Newspage: “There was negligible growth in November and zero real growth during the quarter.
“There is absolutely no policy that I can see that will provide the stimulus the country needs. There is no big idea beyond ‘we’re fixing what the Tories did’, but it no longer cuts it.”
Lucinda O’Reilly, director at The International Trade Consultancy, said the latest GDP data “precisely reflects my business activity”.
She added business was actually very good in November and December “once the budget of doom was out the way”.
But, she said: “It’s not an indication for optimism though, one of my manufacturing clients has gone into liquidation and everyone is getting rid of staff or pausing recruitment plans and putting up prices.”
Ben Perks, Managing Director at Orchard Financial Advisers, described the UK economy as “stagnant”.
“The figures show the smallest of increases but there is no feel of growth on the streets. The government needs to take action to kickstart this economy and quickly,” he said.
