15 February 2024 , 23:12
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Rishi Sunak’s promises to kickstart the economy were in tatters on Thursday as Britain plunged into recession.
One of the PM’s five key pledges was to grow the economy. But Shadow Chancellor Rachel Reeves blasted: “Britain remains trapped in a spiral of economic decline.” It sparked further fears of another round of savage cuts to public services.
The Office for National Statistics on Thursday said the economy shrank by a worse-than-feared 0.3% in the final three months of last year.
The fall – after a 0.1% drop the previous quarter – amounts to a technical recession. Ms Reeves said: “Rishi Sunak’s promise to grow the economy is now in tatters. Britain remains trapped in a spiral of economic decline.”
The figures came a day after Mr Sunak boasted the economy had “turned a corner”. Ms Reeves also said the average British family is 20% worse off than those in Germany, with one in three working-age households having less than £1,000 in savings, as many face – or have already been hit by – a surge in mortgage or rent bills.
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Chancellor Jeremy Hunt said: “While interest rates are high – so the Bank of England can bring inflation down – low growth is not a surprise.”
He is reportedly considering slashing billions of pounds from public spending plans to fund tax cuts in next month’s Budget. The Resolution Foundation think tank said that by another measure – gross domestic product per person – the economy has not grown since the start of 2022, making it the worst run since records began in 1955.
Lib Dem leader Sir Ed Davey said: “Rishi’s recession has savaged the British economy by decimating growth and leaving families to cope with spiralling prices. Years of Conservative chaos and a revolving door of Chancellors has culminated in economic turmoil. It’s hardworking Brits forced to pick up the tab for this mess, through high food prices, tax hikes and sky-rocketing mortgage bills.”
The economy grew last year as a whole, but by a pitiful 0.1%, down from 4.6% in 2022 and – when excluding the pandemic-hit plunge of 2020 – it is the weakest growth since the aftermath of the financial crisis in 2009.
Asda chief Lord Rose said: “It looks like a duck, it quacks like a duck, it walks like a duck, it is a duck – it is a recession. It doesn’t matter if it is a technical recession or not.”
Growing the economy was one of the five pledges Mr Sunak set out for this year, along with halving inflation, reducing national debt, cutting NHS waiting lists and stopping the boats. TUC chief Paul Nowak said: “The UK economy is in dire straits.
“The Conservatives’ economic failures are hitting jobs and living standards. With household budgets at breaking point, spending is down and the economy is shrinking. At the same time our crumbling public services are starved of much-needed funding.”
He added: “After being in power for 14 years, the Tories have driven our economy into a ditch and have no idea how to get out.”
Confirmation of a recession is likely to pile pressure on the Bank of England to cut interest rates. Separate figures on Thursday showed the number of direct debit payments being missed by households had jumped 14% year-on-year.