UK economy’s sluggish growth blamed on budget build-up

The government has been accused of hurting the economy over the prolonged run-up to the budget after figures showed economic growth barely rose in the three months to September.
In its first estimate for GDP in the third quarter, the Office for National Statistics said the economy expanded by 0.1 per cent over the period, the slowest since early last year and down from 0.5 per cent in the previous quarter. In September, the economy contracted by 0.1 per cent compared with August.
The tepid figures come after several surveys suggested that companies were delaying hiring and investment decisions and households were postponing some spending before the October 30 budget, when Labour warned of “tough choices” on the public finances.
Ben Jones, lead economist at the CBI, said: “Uncertainty ahead of the budget probably played a big part, with firms widely reporting a slowdown in ­decision-making.”
Rachel Reeves, the chancellor, waited a record 117 days before delivering her budget. She said she was “not satisfied with these [GDP] numbers” which put the UK at the second bottom of the G7 growth pile. Labour has said it wants the economy to consistently achieve the highest growth rate in the bloc by the end of the parliament.
Sir Keir Starmer will dismiss suggestions of U-turns on contentious budget measures on Saturday, vowing to defend them “all day long” after business opposition to an increase in employer national insurance contributions and a backlash from farmers over changes to inheritance tax. In a speech to the Welsh Labour conference, the prime minister will promise to “stick to our plan”.
Starmer will say: “People will say, ‘We should turn back’, ‘that’s enough’ … they’ve already started.” He will instead promise to “stay the course”.
• Gloomy growth figures mask bright spots
Reeves has shrugged off business demands to change course on national insurance, while No 10 is said to have rejected a push by the Department for Environment, Food and Rural Affairs to soften the impact of inheritance tax on ­farmland.
Despite a fall in consumer confidence in September and October, household spending rose by 0.5 per cent in the quarter, exceeding economists’ expectations. Business investment also grew by 1.2 per cent in the three months.
The ONS said there was a sharp ­decline in inventories, or goods held ­by businesses, which pushed down the growth rate by 0.9 percentage points, and a fall in output in the IT sector in September.
“The economy was depressed by ­erratic sectors that will rebound, so we continue to look for growth to accelerate in the fourth quarter,” Rob Wood, chief UK economist at Pantheon ­Macroeconomics, a consultancy, said.
Mel Stride, the shadow chancellor, told Times Radio: “I’m afraid [Labour are] reaping to a degree what they’ve done in terms of talking the economy down.”