Labour is plunging the UK into a recession after making the UK “a hostile climate for aspiration, investment and growth”.
Top business bosses have warned the economy “is headed for the worst of all worlds”, with lower growth and higher prices after Rachel Reeves’s disastrous £25 billion national insurance hike.
The Chancellor is also putting off businesses from hiring more workers, the Confederation of British Industry said.
Critics warned a recession is “increasingly likely” and warned it “will be one made in Downing Street”.
Andrew Griffith MP, Shadow Business and Trade Secretary, said: “Since taking office the Chancellor has made this country a hostile climate for aspiration, for investment, and for growth.
“Rachel Reeves’s tax-raising spree and trash-talking her economic inheritance is literally killing businesses and jobs.
“If there is a recession – and based on these CBI expectations that seems increasingly likely – it will be one made in Downing Street.
“Labour need to urgently change course before the damage they are doing becomes even greater.”
The Bank of England last week downgraded its growth forecasts, warning the economy was effectively stagnating.
A major survey by the Confederation of British Industry – published today – found expectations for economic growth are now at their lowest since the chaos triggered by Liz Truss’s mini-budget.
Shadow Foreign Secretary Dame Priti Patel added: “Labour has crashed the economy.
“They inherited the fastest growing economy in the G7 and they have killed off all economic growth.”
Shadow Chancellor Mel Stride told the Daily Express: “The warning lights for the British economy are flashing ever brighter.
“The Labour Government must now urgently revisit their disastrous budget and align economic policy with growth, not decline. Every moment of delay is further damaging business confidence, output and employment.”
The CBI poll found firms expected to reduce their output and abandon hiring plans.
Alpesh Paleja, the CBI’s interim deputy chief economist, said: “There is little festive cheer in our latest surveys, which suggest that the economy is headed for the worst of all worlds – firms expect to reduce both output and hiring, and price growth expectations are getting firmer.
“Businesses continue to cite the impact of measures announced in the Budget – particularly the rise in employer NICs – exacerbating an already tepid demand environment.
“As we head into 2025, firms are looking to the Government to boost confidence and to give them a reason to invest, whether that’s long overdue moves to reform the apprenticeship levy, supporting the health of the workforce through increased occupational health incentives or a reform of business rates.
“In the longer term, businesses will be looking to the industrial strategy to provide the stability and certainty which can unlock innovation and investment – and provide that much-needed growth for the economy which can deliver prosperity for firms and households alike.”
The CBI’s growth indicator survey, based on responses from 899 companies between November 25 and December 12, found expectations for growth are now at their weakest since November 2022 in the aftermath of Liz Truss’s chaotic tenure in No 10.
The predicted fall in activity is broad-based: business volumes in the services sector are anticipated to decline while distribution sales and manufacturing output are also expected to fall sharply in the three months to March.
The survey found a 24 percentage point gap between companies which gave negative responses on expected output and those which gave positive responses, a worse position than in November when there was a 10-point gap.
It is the worst figure since the -27 gap in November 2022 and the latest blow to Ms Reeves after a series of economic indicators painted a disappointing picture.
Cabinet minister Lucy Powell acknowledged the hike in employers’ national insurance contributions, coming into effect in April, has had “consequences” for businesses but insisted it was needed to put more cash into the NHS.
The Commons Leader told Sky News: “We inherited this big black hole in the public finances, which we had to put right, so fixing the foundations of the economy.
“But we also have a fundamental view that in order to have a growing economy over the medium and long-term, you also have to have a healthy economy and a healthy society as well.
“Because it’s no coincidence that we’ve got seven million people waiting for an operation in this country and we’ve got such high numbers of people out of work, inactive and on sickness benefits and so on, in this country.
“And that’s why we took the decision in the Budget, it was a difficult decision, and it’s had consequences for businesses, I understand that, with the national insurance rise, but we took the decision to put a record level of investment into our National Health Service to bring down those waiting lists.”
The UK economy unexpectedly shrank in October – marking the second successive contraction for the first time since the Covid-19 pandemic.
The Office for National Statistics (ONS) said gross domestic product (GDP) fell 0.1% in October.
And fears over inflation – already at an eight-month high – prompted the Bank of England to leave interest rates on hold at 4.75%.
It was a blow to millions of borrowers who hoped that rates would be falling more sharply by now.
Inflation hit 2.6% in November, its highest level since March and the second monthly increase.
Bank of England governor Andrew Bailey said: “We think a gradual approach to future interest rate cuts remains right, but with the heightened uncertainty in the economy, we can’t commit to when or by how much we will cut rates in the coming year.”
A Treasury spokesperson said: “We had to make difficult decisions at the budget to fix the economy and the £22bn black hole this government inherited. We have wiped the slate clean and delivered the stability businesses so desperately needed.
“More than half of employers will either see a cut or no change in their National Insurance bills.
“We have capped corporation tax at the lowest rate in the G7, provided 40% business rates relief next year for 250,000 properties where there were no plans to do so, launched a 10-year infrastructure strategy and are creating pension mega funds to boost investment in British businesses, infrastructure and clean energy.
“This is alongside establishing a National Wealth Fund to catalyze over £70 billion in investment to drive growth in ours to boost investment in British businesses.”
This post was originally published on here
