Rachel Reeves accused of 'killing growth' (Image: Getty Images)
Rachel Reeves was accused of “killing growth” as new figures revealed how the UK economy is stagnating.
Shadow Chancellor Mel Stride warned people are “already paying” for the Chancellor’s Budget “with ever rocketing taxes, hundreds of thousands of job cuts and business confidence plummeting.”
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He warned of more price and tax hikes and job losses this year, adding that Ms Reeves is "out of her depth".
The UK economy grew by 0.1% between October and December last year, according to the Office for National Statistics.
Shadow Chancellor Mel Stride has blasted the latest figures. (Image: UK House of Commons/AFP via Gett)
It comes after the Bank of England halved its growth forecast for the UK.
Shadow Chancellor Mel Stride MP said: “The Chancellor promised the fastest growing economy in the G7, but her budget is killing growth.
“Working people and businesses are already paying for her choices with ever rocketing taxes, hundreds of thousands of job cuts and business confidence plummeting.
“It does not need to be this way. Under new leadership, the Conservative Party will continue to oppose Labour’s disastrous decisions and stand up for businesses and working people up and down our country.”
Mr Stride warned the UK “faces ‘stagflation’ – the combination of weak growth & inflation.”
He added: “Business and consumer confidence has plummeted since Labour announced ￡40billion of new taxes at the Budget.
“In 2025, expect to see job cuts and price hikes.
“Labour’s disastrous Budget has backfired.
“With downgraded growth, the Chancellor is also facing the prospect of breaking her own fiscal targets.
“If that happens, Labour will only have a few choices raise taxes further or cut public spending.
“Be in no doubt, this is a direct result of Labour’s failed economic policies.
“The Labour Chancellor is out of her depth and we’re all paying the price.”
Responding to the latest GDP figures that showed 0.1% growth, Liberal Democrat Treasury spokesperson Daisy Cooper MP said: “The Chancellor's Budget has resulted in pitiful economic growth. Her complete pigs ear of a jobs tax will hammer small businesses, the backbone of our economy.”
John O’Connell, chief executive of the TaxPayers' Alliance, said: “The brutal reality for British taxpayers is that despite headline figures showing marginal overall growth, they are experiencing their own personal recession.
“Two consecutive quarters of falling GDP per capita means a sustained and damaging decline in living standards for the average household, with potentially worse to come given much of Rachel Reeves’ catastrophic budget is yet to come into effect.
“During periods of personal recession there should be a significant policy response including freezes on public sector pay, limits on benefit increases and spending reviews for government departments.”
Hailey Low, National Institute of Economic and Social Research Associate Economist, said: “The UK economy wrapped up 2024 on a flat note, with December’s GDP indicating stagnation in the last quarter and concluding a disappointing year for growth. Low business and consumer confidence suggest that 2025 starts on shaky ground, with weak investment and cautious consumer spending hindering momentum.
It will be crucial to wait and see if the Government's budget spending measures, which come into effect in April, are sufficient to restore optimism and stimulate growth in the medium term.”
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The Office for National Statistics (ONS) said gross domestic product (GDP) edged 0.1% higher between October and December, following no growth in the previous three months.
The ONS estimated that the economy expanded by 0.4% in December, which is better than most analysts expected, and marked a pick-up following a 0.1% rise in November and a 0.1% fall in October.
The fourth quarter figures mean the economy grew by 0.9% overall in 2024.
Chancellor of the Exchequer Rachel Reeves said: "For too long, politicians have accepted an economy that has failed working people. I won’t.
"After 14 years of flatlining living standards, we are going further and faster through our Plan for Change to put more money in people's pockets.
"That is why we are taking on the blockers to get Britain building again, investing in our roads, rail and energy infrastructure, and removing the barriers that get in the way of businesses who want to expand.”
The OBR forecast suggests that Britain is on course for either higher taxes or spending cuts, which could prompt a major rebellion by Labour MPs.
The deficit has been born of a combination of cuts in forecasted growth, confirmed by the Bank of England last week, and the rising price of government borrowing (gilts).
Ms Reeves’ first Budget left her with ￡9.9 billion of so-called ‘headroom’, meaning she had a ￡10 billion buffer in case the cost of borrowing increased or GDP growth fell.
However, the turbulent market moves may have wiped this out earlier in the year.
The Treasury insisted it would not comment on the substance of the leak, and Permanent Secretary James Bowler launched a leak inquiry yesterday afternoon.
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Mr Bowler said: “We will be investigating and following it up as a potential leak”.
“It is important to put a ring round these forecasts and ensure they are not in the public domain.”
In January, the Institute for Fiscal Studies warned that the Chancellor’s ‘stability rule’ - that day-to-day spending must be met from taxes - was on course to be wiped out.