‘Yes, we’re in a recession’: That’s the ‘actual world’ scenario says professional, after UK financial system shrinks for second month in a row

Labour was accused on Friday of giving up on growth after the economy shrank for the second month in a row – raising fears of a recession.

Official figures showed that gross domestic product (GDP) fell by 0.1 per cent in October. It has not grown in any month since June.

That is despite Sir Keir ­Starmer’s insistence that growth is the Government’s No 1 ­mission – a claim that rings increasingly hollow.

Leading economist Julian ­Jessop said: ‘Recession is ­usually defined as two successive ­quarters of negative growth, and we’re not there yet. But in the real world, yes we’re in [a recession].’ 

Chancellor Rachel Reeves was blamed for fuelling the downturn as the prolonged build-up to last month’s Budget saw ­rampant speculation and Whitehall briefings on what would be in it, leaving households and businesses in limbo.

The Budget contained no measures significant enough to lift the economic outlook and instead piled up £30 billion more in tax hikes to help pay for a splurge on welfare spending.

Mr Jessop, economics fellow at the Institute of Economic Affairs, a free-market think-tank, said the latest data ‘confirms that Budget speculation has killed growth’.

He added: ‘The Government appears to have given up on growth in favour of policies aimed at redistributing income and increasing state intervention across the ­economy. This has undermined the incentives to work, save and invest, and squeezed any positivity out of the private sector.’

Chancellor Rachel Reeves was blamed for fuelling the downturn as the prolonged build-up to last month’s Budget saw rampant speculation and Whitehall briefings on what would be in it, leaving households and businesses in limbo

Shadow Chancellor Sir Mel Stride said the GDP setback was ‘a direct result of Labour’s ­economic mismanagement’. 

He added: ‘For months, Rachel Reeves has misled the British public. She said she wouldn’t raise taxes on working people – she broke that promise again. She insisted there was a black hole in the public finances – but there wasn’t.’

The latest GDP figures, published by the Office for National Statistics (ONS), revealed that in October firms had been held back as they were ‘waiting for the ­outcome of the autumn Budget‘.

Experts had hoped that the economy would enjoy a brighter October after September’s figures were affected by a devastating cyber attack on Jaguar Land Rover, Britain’s biggest car maker.

The ONS said that, after shrinking by 1.7 per cent in September, manufacturing bounced back slightly by 0.5 per cent in October.

Labour-backing billionaire John Caudwell said the Government’s first Budget was having an impact on GDP figures.

The Phones 4u founder told the BBC: ‘It was wealthy people-unfriendly. It’s driven a lot of wealthy people out of the UK.

‘Now on top of that, we’ve got the Employment Rights Bill coming in – which, of course, we knew about in the manifesto, but I guess there was always a hope that it may not transpire, and that is going to make Britain less competitive.’

Downing Street rejected suggestions the UK is on ‘recession watch’. A spokesman for the Prime Minister said: ‘I don’t accept that. These are monthly figures.’

The Confederation of British Industry warned that tax rises were hitting jobs and growth, while accusing Labour of failing to take the ‘bold choices’ needed to boost the economy.