UK on recession alert: Fresh blow for Rachel Reeves as GDP FALLS for the second month in a row with 0.1% drop in May
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Rachel Reeves suffered a fresh blow today as the economy slipped into the red for a second month in a row.
GDP was down 0.1 per cent in May, surprising analysts who had pencilled in a small expansion.
It followed a 0.3 per cent drop in April. If the number is negative again this month the UK would officially be in recession.
The Chancellor admitted the data were ‘disappointing’, as she desperately struggles to balance the government’s books.
Fears were already running high of another major tax raid in the Autumn Budget, with estimates of a £30billion hole in the public finances.
ONS Director of Economic Statistics Liz McKeown said: ‘The economy contracted slightly in May with notable falls in production and construction, only partially offset by growth in services.
GDP was down 0.1 per cent in May, following a 0.3 per cent drop in April
The economy has not seen any growth since March
The grim figures heap pressure on the Chancellor, who has been hoping that growth can help her balance the government books
‘However, across the latest three months as a whole, the economy still grew. This reflected strength earlier in the year that resulted, in part, from some activity being brought forward to February and March.
‘May’s fall in production was driven by oil and gas extraction, car manufacturing and the often-erratic pharmaceutical industry.
‘While services grew overall in May with a strong month for legal firms, which recovered from a weak April, and computer programming, these were partially offset by a very weak month for retail sales.’
Ms Reeves tried to put a brave face on the dire figures, listing government policies.
‘Getting more money in people’s pockets is my number one mission. While today’s figures are disappointing, I am determined to kickstart economic growth and deliver on that promise,’ she said.
‘The choices we have made in our first year in government have seen us extend the £3 bus fare cap, fund Free School Meals for over half a million more children, press ahead with plans to deliver free breakfast clubs for every child in the country and increase the National Minimum and National Living Wage, giving a pay rise to 3 million workers.’
But shadow Chancellor Mel Stride said: ‘Thanks to Labour’s reckless choices the economy actually shrank in May. This will pile even further pressure for tax rises in the Autumn.
‘Labour’s costly u-turns, on winter fuel and welfare, have created a ticking tax timebomb.
‘Under Labour, we have seen taxes hiked, inflation almost double, unemployment rise, and growth stagnate. With more taxes looming, things will only get worse and working people will pay the price.’
