Tue, 29 November 2022

Newsletter sign-up

Subscribe now
The House Live All
Economy
To solve the housing crisis, plan ahead for materials supply Partner content
Economy
Economy
Economy
Economy
Press releases

Jeremy Hunt Warns Of “Tough Road Ahead” As Economy Shrinks Again

Jeremy Hunt Warns Of “Tough Road Ahead” As Economy Shrinks Again

The Chancellor Jeremy Hunt has warned there will be “extremely difficult decisions” on the economy in his Autumn Statement next week (Alamy)

3 min read

Chancellor Jeremy Hunt has warned the UK faces “a tough road ahead” after new ONS figures showed the economy contracted by 0.2 per cent between July and September, signalling the start of a recession.

Recession is officially defined as two quarters of shrinking GDP in a row. Last week the Bank of England forecast the country could be headed for an eight-quarter recession – the longest since reliable records began in the 1920s.

Hunt said this will mean “extremely difficult decisions” as he prepares to announce his Autumn Statement next week, which is expected to include a series of tax rises and spending cuts.

The Office for National Statistics (ONS) said that while the overall figure for the quarter was a 0.2 per cent fall in GDP, there was a 0.6 per cent fall in September itself – driven in part by the death of the Queen but also a fall in manufacturing.

"We are not immune from the global challenge of high inflation and slow growth largely driven by Putin's illegal war in Ukraine and his weaponisation of gas supplies," Hunt said in response to the figures. 

"I am under no illusion that there is a tough road ahead – one which will require extremely difficult decisions to restore confidence and economic stability.

“But to achieve long-term sustainable growth, we need to grip on inflation, balance the books and get debt falling. There is no other way.”

He added: "While the world economy faces extreme turbulence, the fundamental resilience of the British economy is cause for optimism in the long run."

Labour’s shadow Chancellor Rachel Reeves called the latest GDP figures "extremely worrying”. 

"Today's numbers are another page of failure in the Tories' record on growth, and the reality of this failure is family finances crunched, British businesses left behind and more anxiety for the future," she said.

"Britain's unique exposure to economic shocks has been down to a Conservative-led decade of weak growth, low productivity and under-investment and widening inequality.”

ONS director of economic statistics Darren Morgan said: "With September showing a notable fall partly due to the effects of the additional bank holiday for the Queen's funeral, overall the economy shrank slightly in the third quarter.

"The quarterly fall was driven by manufacturing, which saw widespread declines across most industries.

"Services were flat overall, but consumer-facing industries fared badly, with a notable fall in retail."

It has prompted the Confederation of British Industry (CBI) to urge the government to "learn the lessons" of the last decade with the Autumn Statement, saying “fiscal sustainability and lifting trend growth are both immediate priorities”.

Alpesh Paleja, a CBI lead economist, said: "Alongside reassuring markets and protecting the most vulnerable, the government should safeguard capital spending and investment allowances to drive private sector growth."

The Federation of Small Businesses has called the latest GDP figures "dreadful news”, with its national chairman Martin McTague saying his sector has already been “facing increasing recessionary pressures for months now”.

"The fall in GDP is one headline figure made up of countless bits of disappointing news for small businesses across the country – a new venue or premises they couldn't open, a contract which ended unexpectedly, a staff member they had to let go,” he added.

"Taken together, the impact on the economy is huge and the government must demonstrate that it has grasped the scale of the issue."

PoliticsHome Newsletters

PoliticsHome provides the most comprehensive coverage of UK politics anywhere on the web, offering high quality original reporting and analysis: Subscribe

Read the most recent article written by Alain Tolhurst - Rishi Sunak Urged To Match "Robust" China Rhetoric With Policy “Depth”

Categories

Economy
Podcast
Engineering a Better World

The Engineering a Better World podcast series from The House magazine and the IET is back for series two! New host Jonn Elledge discusses with parliamentarians and industry experts how technology and engineering can provide policy solutions to our changing world.

NEW SERIES - Listen now