Tuesday, December 5, 2023
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'Depressing' GDP stagnation sparks warning to Tories to cut taxes or lose election

Chancellor Jeremy Hunt has been urged to cut taxes to help the economy after there was no growth in the last quarter of the year.

Julian Jessop, economics fellow at the Institute of Economic Affairs, told Express.co.uk: “Some people are almost relieved the economy didn’t shrink. It’s a pretty depressing world where flat growth is seen as a relief.

“The bigger picture here is that the economy is clearly struggling. So are our competitors in the rest of Europe but that’s no consolation. We need to be asking why growth isn’t a lot stronger than this.”

He cited several causes for the lack of growth, most importantly the Bank of England raising interest rates in efforts to bring down inflation.

He said: “We’re not going to get a return to sustainable growth until the inflation problem is squashed. I think that will happen. Interest rates won’t have to stay this high for long.

“If the economy remains this weak, that’s clearly not good enough for the Conservatives to win the next election.

“They need proper growth and that requires inflation to fall and for the Government to adopt policies that are more growth friendly including tax cuts and other supply side reforms.”

He said another reason the economy is struggling is people leaving work or choosing to retire early.

Mr Hunt is set to deliver his next budget at the Autumn Statement on November 22, with the Chancellor previously said to have been mulling tax cuts.

The latest GDP figures from the Office for National Statistics (ONS) showed no growth in the economy for the three months from July to September.

Darren Morgan, ONS director of economic statistics said: “The economy is estimated to have shown no growth in the third quarter.

“Services dropped a little with falls in health, management consultancy and commercial property rentals.

“These were partially offset by growth in engineering, car sales and machinery leasing.”

Experts are now warning the lack of growth in the leaves Britain at risk of recession.

Nicholas Hyett, investment analyst at Wealth Club, said: “Economic stagnation isn’t pretty long term, but if inflation can be brought under control without pushing the economy into outright recession then that will be no mean feat.”

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