Today’s disappointing growth figures reflect that the UK has returned to the slower lanes of growth, having outperformed earlier in the year.The 0.1% growth seen in the July-to-September quarter was below forecasts, and the economy shrank in the month of September.A breakdown in car production following the cyber-attack on Jaguar Land Rover does explain September’s contraction, and why the overall growth figures were worse than expected. The ONS told me that if vehicle production had been flat rather than the worst monthly fall on record outside of the pandemic, GDP in September would have gone up. That is not the full story, though. Momentum in the economy has clearly flagged.In particular, slowdowns in consumer-facing services and business investment are a key concern.Higher costs of employment and the constantly rolling uncertainty are not helping. Consumers remain cautious, with high savings rates, and businesses have not yet turned on the investment taps.A key objective for the Budget is to end the constant doom loop of speculation about tax changes. There will be a bigger buffer against fiscal shocks, and potential changes to how often the chancellor’s borrowing rules are assessed.Certainty has a price, however, in terms of tax rises. The Budget will try to target the rise in tax away from worker pay packets and investors, but the sums involved make this a tricky task.The silver lining for some to the cloudy figures is that a further Bank of England rate cut next month now seems very likely, with perhaps more to come next year.It is reflected in the declining cost of government borrowing on markets, with key two- and five-year rates now below what Labour inherited when entering office. The cost of …
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[mwai_chat context=”Let’s have a discussion about this article:nnToday’s disappointing growth figures reflect that the UK has returned to the slower lanes of growth, having outperformed earlier in the year.The 0.1% growth seen in the July-to-September quarter was below forecasts, and the economy shrank in the month of September.A breakdown in car production following the cyber-attack on Jaguar Land Rover does explain September’s contraction, and why the overall growth figures were worse than expected. The ONS told me that if vehicle production had been flat rather than the worst monthly fall on record outside of the pandemic, GDP in September would have gone up. That is not the full story, though. Momentum in the economy has clearly flagged.In particular, slowdowns in consumer-facing services and business investment are a key concern.Higher costs of employment and the constantly rolling uncertainty are not helping. Consumers remain cautious, with high savings rates, and businesses have not yet turned on the investment taps.A key objective for the Budget is to end the constant doom loop of speculation about tax changes. There will be a bigger buffer against fiscal shocks, and potential changes to how often the chancellor’s borrowing rules are assessed.Certainty has a price, however, in terms of tax rises. The Budget will try to target the rise in tax away from worker pay packets and investors, but the sums involved make this a tricky task.The silver lining for some to the cloudy figures is that a further Bank of England rate cut next month now seems very likely, with perhaps more to come next year.It is reflected in the declining cost of government borrowing on markets, with key two- and five-year rates now below what Labour inherited when entering office. The cost of …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
