UK Treasury chief says she’s not satisfied by paltry third-quarter economic growth
Britain’s Treasury chief Rachel Reeves said Friday that she is “not satisfied” by official figures showing the British economy’s rebound from recession slowed down sharply in the third quarter of the year, with most sectors stagnating.
The Office for National Statistics said growth during the July to September period was just 0.1%. That was lower than the 0.5% recorded in the previous three-month period and below market expectations for 0.2%.
The statistics agency said overall output in September actually shrank, a development that is likely to fuel accusations from critics of the new Labour government that it talked the economy down in its first few weeks in power.
On coming to power in July for the first time in 14 years, the government described its economic inheritance from the former Conservative administration as the bleakest in decades, which required it to take urgent action to fix the public finances. Conservative lawmakers have argued that the “doom and gloom” talk prompted businesses and consumers to hold off their spending decisions until Reeves delivered her budget in late October.
Reeves used the budget to raise taxes sharply, mainly on business, as well as increasing spending on public services, such as the state-run National Health Service, and borrowing on investments.
“Improving economic growth is at the heart of everything I am seeking to achieve, which is why I am not satisfied with these numbers,” Reeves said following the figures.
Prime Minister Keir Starmer has said raising economic growth his government’s number one priority over the next five years. Since the global financial crisis in 2008-9, the British economy has underperformed relative to previous years and actually slipped into a modest recession in 2023.
One factor hobbling the economy, many economists say, is Britain’s departure from the European Union in 2020, which has made trade more difficult. Though the post-Brexit trade agreement between the two sides ensured there would be no tariffs placed on goods, exporters are finding life tough.
As part of Brexit, the U.K. also left the frictionless single market and the customs union, which means firms have to file forms and customs declarations for the first time in years.
On Thursday evening, Bank of England Governor Andrew Bailey said the “changing trading relationship” with the EU has weighed on the economy.
“It underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people,” he said.
Starmer has said he wants to improve the trading relationship with the EU but has ruled out the possibility of Britain rejoining the single market or the customs union, or of a return of the freedom of movement of people.
For many, that means there can only be limited improvements to the current trading arrangements.
UK Treasury chief says she’s not satisfied by paltry third-quarter economic growth