Category Archives: Economic growth (GDP)

Economic growth to pick up but risks to recovery ‘elevated’, say UK forecasts

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Households and firms can expect more financial pain despite Britain dodging technical recession, says KPMG

Britain will be left with deep scars from the pandemic despite narrowly escaping a second recession within three years and growing signs of an economic pick up, according to new forecasts.

A new report by the accountancy firm KPMG has found that the economy has enjoyed a better start to the year than it had thought, and is now expected to grow by 0.3% this year, compared with its previous prediction of an uplift of just 0.1%.

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Rishi Sunak warned over possible UK recession in 2024

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High inflation likely to push interest rates above 5% and force up mortgage and loan payments just ahead of election

Rishi Sunak has been warned the UK economy could be in recession next year as stubbornly high inflation pushes interest rates to more than 5% before the next general election.

Setting the stage for a further rise in borrowing costs on mortgages and loans for millions of households, economists predicted the Bank of England could be forced to drive Britain’s economy into a recession to tame inflation.

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UK can expect year of stagnation after narrowest of escapes from recession

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Marginal expansions and contractions in 2023 will do little to solve a lack of investment and export shortfall

It was a recession in all but name: that is the conclusion of many economists who argue that while the official data shows the UK economy stood still in the last three months of 2022 rather than contracting, it is still in bad shape.

To be precise, the economy actually expanded by 0.01% in the fourth quarter, an increase so statistically insignificant that it is rounded down to zero. Had Britain not added just £77m to its £2.2tn gross domestic product (GDP) then it would have fallen into a technical recession, characterised by two consecutive quarters of negative growth.

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Jeremy Hunt to promote low-tax and private sector ‘re-tooling’ of industry

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Chancellor also expected to tell markets that government spending will remain within strict limits

Jeremy Hunt will defend the government’s vision for Britain’s economic future in a speech to City executives in London on Friday when he will lay out plans for investment and growth.

The chancellor will say he wants to promote policies that allow the private sector to re-tool the UK’s industrial base and re-skill the workforce to generate strong growth over the next decade.

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Tax collectors lack ambition, say MPs, as £42bn remains unpaid

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Fraud and error have left ‘eye-watering’ amount owed to HMRC, says public accounts committee

The government has been criticised for failing to collect £42bn in unpaid tax from businesses and individuals amid concern over the strain on the public finances as the UK’s economy stands on the brink of recession.

The cross-party Commons public accounts committee (PAC) said that an “eye-watering” amount of tax was owed to HMRC, while also criticising tax collectors for lacking ambition to tackle fraud and error.

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Exodus of more than half a million from workforce ‘puts UK economy at risk’

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Loss of employees since Covid raises fears of weaker growth and higher inflation, says Lords report

An exodus of more than half a million people from the British workforce since the Covid pandemic is putting the economy at risk of weaker growth and persistently higher inflation, a Lords report has warned.

The House of Lords economic affairs committee said the sharp rise in economic inactivity – when working-age adults are neither in employment nor looking for a job – since the onset of the health emergency was posing “serious challenges” to the economy.

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Bank of England raises interest rates to 3.5% in ninth increase in a year

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Majority of MPC rate-setters back hike of 0.5 percentage points despite fears UK is entering a long recession

Mortgage payers are braced for higher borrowing costs, after the Bank of England pushed up its base rate by 0.5 percentage points to 3.5% despite saying inflation has peaked and Britain is about to enter “a prolonged recession”.

The Bank hiked interest rates on Thursday for the ninth time in a year, to the highest level in 14 years, but told borrowers to prepare for fresh increases in the new year.

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UK economy returns to growth as GDP rises 0.5% in October

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Growth figure shrank 0.3% in a quarter, reflecting concerns over lengthy recession

Britain’s economy returned to growth in October as activity bounced back from the impact of the additional bank holiday for the Queen’s funeral, however a long recession is still expected.

The Office for National Statistics said gross domestic product (GDP) rose by 0.5% on the month, after a decline of 0.6% in September when many businesses closed their doors during the national mourning period.

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Is the UK really facing a second winter of discontent?

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Comparisons with 1979 are misleading – strikes over pay now are smaller in scale and focus, and stoked by inflation

Britain is facing a winter of strikes, as industrial action on the railways spreads to the health service and other key sectors of the economy. Such is the wave of discontent that more than 1m working days could be lost to disputes in December, the most since 1989, during Margaret Thatcher’s final years in power.

With inflation at the highest rate in 41 years amid the cost of living crisis, it’s not difficult to see why workers are pushing for better pay. Coming after the worst decade for average wage growth since the Napoleonic wars, including deep real-terms pay cuts for many in the public sector, it’s even less surprising still.

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How the autumn statement brought back the ‘squeezed middle’

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IFS and Resolution Foundation say Jeremy Hunt’s policies will shock middle England, with higher taxes here to stay


Traditionally elections in Britain are decided by swing voters in a relatively small number of seats. Parties go to considerable lengths to tailor their policies to the perceived demands of those getting by on average incomes. Pollsters have even coined names for the archetypal electors that need to be wooed: Basildon man and Worcester woman.

So it will be of some concern to government strategists that the post-autumn statement analysis by thinktanks focused heavily on how the measures announced by Jeremy Hunt had an effect on those not particularly poor but not especially rich either. Both the Resolution Foundation and the Institute for Fiscal Studies highlighted the return of the “squeezed middle”.

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Decline of UK manufacturing accelerates as government ‘abandons’ sector

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Amid higher costs and worker shortages, British Chambers of Commerce says Brexit is another factor

When the minor ups and downs caused by the extra bank holiday for the Queen’s funeral are stripped out of the latest GDP figures, it is clear the long decline of Britain’s industrial base has accelerated.

Protected by the government through the coronavirus pandemic, this year, factory owners say ministers have abandoned them to cope with a long recession without so much as a glance in their direction.

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UK economy being held back by worsening health of British public, Andy Haldane warns

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RSA chief executive says more than a century of progress was now going into reverse

The worsening health of the British people is holding back economic growth for the first time since the Industrial Revolution after years of underinvestment in services, Andy Haldane has warned.

The chief executive of the Royal Society of Arts (RSA) said more than a century of progress on health and wellbeing was going into reverse, with a direct impact on the economy and the cost of living emergency.

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Non-dom tax breaks being reviewed by the Treasury in effort to raise revenue

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Officials are also looking at incorporating cut in tax-free allowance for dividends into autumn statement

Treasury officials are examining whether the autumn statement could include changes to non-dom status and moves to raise taxes on dividends by cutting tax-free allowances.

No final decisions have been taken but Whitehall sources said options were being examined by the Treasury’s high net worth individuals policy team.

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Lloyds bank profits plunge by 26% as lender prepares for bad loans

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Larger-than-forecast drop to £1.5bn in third quarter came despite rising interest rates

Profits at Lloyds Banking Group dropped by 26% in the three months to September, as the UK’s “deteriorating” economic outlook forced it to put aside nearly £670m to protect against potential defaults on loans and mortgages.

Lloyds, which owns Halifax and is the country’s largest mortgage lender, said pre-tax profits had tumbled to £1.5bn in the third quarter, down from £2bn during the same period last year. That was larger than the 9.5% fall to £1.8bn that analysts had predicted.

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Senior Tories say Boris Johnson’s return as PM would risk party’s death

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Boris Johnson and Rishi Sunak hold talks as deadline for nominations approaches on Monday

Senior Tories are engaged in a frantic campaign to stop Boris Johnson staging a dramatic return to Downing Street, with claims he would cause further economic damage and risk “the end of the Conservative party”.

Johnson’s team was claiming on Saturday night that he had privately secured the support of the 100 MPs necessary for entering the race, despite only 55 backing him in public. The assertion was immediately disputed by MPs and rival leadership campaign sources. Johnson released a photo of himself lobbying an MP on the phone, but his allies on Saturday night could not confirm he would officially enter the contest to win back the leadership he was deposed from just months ago.

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UK economic outlook downgraded to ‘negative’ by rating agency

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Moody’s say downgrade from ‘stable’ was driven by political instability and high inflation

The UK’s economic outlook has been downgraded from “stable” to “negative” by the rating agency Moody’s because of political instability and high inflation.

Moody’s said the change in outlook was driven by “heightened unpredictability in policymaking amid weaker growth prospects and high inflation” and “risks to the UK’s debt affordability from likely higher borrowing and risk of a sustained weakening in policy credibility”.

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Liz Truss fights for survival as even allies say she could have only days left

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Prime minister to meet mutinous Tory MPs this week in effort to shore up her position after U-turns on tax

Liz Truss is fighting for her political survival, with Conservative MPs threatening to oust her and even allies warning she has just days to turn around her premiership despite ripping up her economic strategy and appointing Jeremy Hunt as chancellor.

The beleaguered prime minister will attempt to shore up her crumbling support by gathering her cabinet ministers at No 10 on Monday and then embarking on a series of meetings with mutinous Tory MPs before the next budget in a fortnight’s time.

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Unfunded tax cuts mean UK ‘will need £60bn spending cuts’

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IFS says Kwasi Kwarteng’s mini-budget will leave ministers making serious reductions in public services

Kwasi Kwarteng will need to find £60bn of savings by 2026 to fill the gap left by unfunded tax cuts and the costs of extra borrowing triggered by a panicked reaction on international money markets to the chancellor’s “mini-budget”, according to the Institute for Fiscal Studies.

The UK will also struggle to hit the chancellor’s 2.5% growth target, with economic forecasts by the investment bank Citigroup that the IFS uses to underpin its analysis showing the UK will struggle to grow at more than 0.8% on average over the next five years.

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Truss’s mini-budget looks likely to cost the Tories the next election | Pippa Crerar

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Tory MPs fear voters see them as the nasty party again after the prime minister refused to rethink tax cuts for the rich

Liz Truss has long channelled Margaret Thatcher – echoing her rhetoric, her free market instincts and even her clothes – but as the Tory conference kicked off in Birmingham on Sunday many in her party were hoping that she would relinquish ambitions to be the next Iron Lady and drop her mini-budget plans.

There were early glimmers of hope. In an article for the Sun, she admitted her proposals would cause “short term disruption” but that she had an “iron grip” on the country’s finances. Then she told the BBC she understood public concerns. “I do accept we should have laid the ground better,” she said.

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Liz Truss admits she should have ‘laid ground better’ before mini-budget and says cabinet not consulted about 45% top rate tax cut – live

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Latest updates: PM vows to press ahead with mini-budget plans and dismisses objections to top rate of tax being axed

Q: Are you absolutely committed to getting rid of the 45% rate of tax?

Yes, says Truss.

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