Economic Growth Decline in the UK Under Starmer, Mission Impossible?

Britain’s economy shrank for a second month in a row in October in the run-up to the government’s first budget. The first back-to-back falls in output since the onset of the COVID-19 pandemic and a setback for new finance minister Rachel Reeves. Gross domestic product contracted by 0.1% month-on-month in October, as it did in September, the Office for National Statistics said. It was the first consecutive drop in monthly GDP – which is volatile and prone to revision. It was since March and April 2020 when Britain enforced its first coronavirus lockdown.

The BoE trimmed its annual growth forecast for 2024 to 1% from 1.25% but predicted a more substantial 2025 with 1.5% growth. It is reflecting a short-term boost to the economy from Reeves’ budget. Britain’s economic output has grown slowly since the pandemic. Only Germany, which was also hit hard by surging energy costs after Russia’s invasion of Ukraine, has done noticeably worse among the largest advanced economies. Separate ONS trade data showed imports and exports of goods fell in October. Exports to the European Union were higher than exports to the rest of the world for the first time in nearly a year. There is an economic growth decline in the UK under Starmer, but there could be an end to this trend?

The manufacturing industry recorded the sharpest drop in activity in October.

The manufacturing industry fell by 0.6%, followed by construction, which fell by 0.4%. Meanwhile, the services sector, which makes up the bulk of the UK economy, stalled with zero growth. Sir Keir has said he wants the UK to secure the highest sustained economic growth of the G7 group of rich nations. Last week, he set out additional “milestones” to allow people to measure the government’s progress. On the economy, he has pledged to increase real household disposable income per person. He also reiterated a promise to build 1.5 million homes in England.

Kemi Badenoch said figures showing the economy unexpectedly contracted in October show the Prime Minister and Chancellor have been “making the wrong choices” with a budget that is “crashing the economy”. The Tory leader told the PA news agency on a visit to Essex: “I think it shows that the Prime Minister and the Chancellor have been making the wrong choices. They inherited an economy that was growing, and now it is shrinking. Their Budget is crashing the economy, and they need to reverse this.” Economic growth decline in the UK under Starmer is rooted in the previous government.

GDP figures show the UK economy has stopped expanding since Labour took power,

Economic crisis is creating a headache for Keir Starmer after putting growth at the centre of his government’s mission. The UK economy outpaced all of its G7 rivals with 1.2 per cent growth in the first half of this year. But it has stopped expanding since Starmer won the general election on a pledge to boost growth. Across the pond, Donald Trump’s return to the White House risks Britain becoming embroiled in a trade war as the president-elect has committed to tariffs on EU and UK imports of 20 per cent. Economic growth decline in the UK under Starmer could make the situation worse.

Keir Starmer said last week it was the government’s “aim” to make the UK the fastest-growing G7 economy. It is pledging to deliver higher real household disposable income by 2029. However, a range of companies have said they plan to slow spending and hiring after Labour’s budget in October, which included £40bn of tax rises. Last month, the Bank trimmed its annual growth forecast for 2024 to 1% from 1.25% but predicted a stronger 2025 with 1.5% growth. It is reflecting a short-term boost to the economy from the budget.

Economic Growth Decline in the UK Under Starmer

Keir Starmer has warned that things will get worse for the UK before they get better. The prime minister asked the country to accept short-term pain for the long-term good and warned of a strict budget to come in October. He also blamed the Conservatives for leaving a “black hole” in the public finances.  Keir Starmer said taxes needed to rise to rebuild public services and fix the foundations of the economy. He challenged his critics to figure out how to tackle the country’s “unprecedented” problems. Labour would borrow to drive growth and increase taxes to “prevent austerity and rebuild public services”, he said. The government is looking to find around 40 billion pounds in tax rises and spending cuts to address the fiscal gap while putting more money into areas like health and education. Starmer said he rejected the “fiction you can lower taxes (and) spend more on public services without making any changes”. Economic growth decline in the UK under Starmer is terrible news.

In some ways, Labour’s economic inheritance is less grim than it might have been. Economic growth decline in the UK under Starmer is a sign of that. The economy is slowly growing, and real wages are beginning to rise. Inflation is back near its 2% target, and the Bank of England is likely to continue to cut interest rates, easing pressure on mortgages. The jobs market is relatively healthy. Keir Starmer has said it will take a decade to rebuild Britain. But will the government have the stamina to drive forward despite the political and economic headwinds?

Keir Starmer really doesn’t want to end up like Joe Biden.

After five bumpy months in office, the UK’s centre-left prime minister will use a significant speech to shift focus from the abstract goal of boosting UK economic growth to the more tangible target of making voters feel better off. In doing so, his administration has one eye on the fate of the U.S. president, who could boast enviable GDP figures. It still faced the anger of voters, pinched by high inflation, who instead backed the return of Donald Trump. Economic growth decline in the UK under Starmer could lead to loss in upcoming elections.

On the economic front, the (Organisation for Economic Co-operation and Development) OECD’s financial outlook, published recently, contained one reason why Starmer might want to set aside the G7 target. The U.S. and Canada are forecast to significantly outperform Britain in terms of GDP growth. Government advisers insist the shift doesn’t mean they accept defeat on an almost impossible target. They also said that top-of-G7 growth remains the UK’s ambition. But they readily accept a pivot is needed. The prime minister announced six “milestones” to accompany his previous five “missions” for the government. Framed as “measurable deliverables,” the government’s ambition is to deliver on all the milestones by the end of this Parliament.

The six milestones include:

  • Raising living standards in every part of the United Kingdom
  • Building 1.5 million homes in England and fast-tracking planning decisions
  • Ending hospital backlogs
  • Putting police back on the beat with a named officer for every neighbourhood
  • Giving children the best start in life
  • Securing home-grown energy, protecting billpayers
The Cloaked Council
The Cloaked Council
As the The Cloaked Council, Our mission is to make the world a bit more whimsical, one spell, giggle, and invention at a time!

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