Budget speculation kills growth
Responding to the latest growth figures, Julian Jessop, economics fellow at the Institute of Economic Affairs said: “The further contraction in the UK economy in October confirms that Budget speculation has killed growth. Indeed, the latest business surveys suggest that November was even worse.
“The burst of growth at the start of the year is now a distant memory. The economy began to falter in the spring when the increases in employers National Insurance and other business costs in last year’s Budget finally kicked in.
“There was then a brief recovery as fears of a global trade war faded, but this was followed by an extended period of uncertainty ahead of this year’s Budget. The leaks, unhelpful speculation and negative briefings clearly damaged confidence and activity across large parts of the economy.
“The Bank of England is now almost certain to cut interest rates again next week, but only because the weakness of the economy and especially of the jobs market are offsetting worries about high inflation. This is nothing to cheer.
“Some easing of uncertainty after the Budget might still allow another bounce in activity next spring. In contrast to 2024, most of the latest tax increases will not take effect for several years. Nonetheless, it is very hard to restore economic confidence once it has been lost.
“The government appears to have given up on growth in favour of policies aimed at redistributing income and increasing state intervention across the economy. This has undermined the incentives to work, save and invest, and squeezed any positivity out of the private sector.”