Britain’s economy has flatlined, borrowing is worse than feared and shoppers are staying away from the high street, according to figures that paint a grim backdrop to next week’s Budget.
A closely watched business survey showed private sector growth has slowed almost to a standstill this month, partly because of uncertainty over what the Chancellor will announce.
The monthly purchasing managers’ index (PMI) poll gave a reading of 50.5 for November – on a scale where 50 is the neutral mark separating growth from contraction.
And Government borrowing so far this financial year has been £10 billion worse than predicted, the Office for National Statistics (ONS) reported.
That further complicates Rachel Reeves‘ attempts to patch up the public finances.
Separate ONS figures showed that retail sales fell last month – illustrating the anxious mood among consumers fearing a financial hit in the Budget.
Yesterday, US investment bank Goldman Sachs warned that Ms Reeves is likely to announce tax increases of £30 billion, further crushing growth.
The slew of dismal statistics represent the latest evidence of the deteriorating environment for business and consumers in Britain under Labour.
Chancellor Rachel Reeves (pictured) is set to announce her budget next week at a time where so far this financial year has been £10 billion worse than predicted
People passing closing down signs in Bath during a time where uncertainty over next weeks budget has lead to private sector growth coming to almost to a standstill this month
They add to worries that Wednesday’s Budget has drained even more fuel from an economy already sapped by the big tax rises she imposed last year. Inflation also remains stubbornly high at 3.6 per cent, the highest in the G7 group of economies
Tory business spokesman Andrew Griffith said: ‘We are seeing the impact of Reeves’ Budget uncertainty hanging like a wet blanket over the economy. It didn’t have to be this way. She’s managed to do damage to business even before she stands up.’
The PMI figures, compiled by financial firm S&P Global Market Intelligence, highlighted the state of an economy that remains in the doldrums despite Labour’s claim to have made growth the party’s top target.
Chris Williamson, chief business economist at the firm, said: ‘EGrowth has stalled, job losses have accelerated, and business confidence has deteriorated.’
The latest figures are consistent with zero gross domestic product growth in November and 0.1 per cent growth in the fourth quarter, he said.
That follows recent official figures showing growth of just 0.1 per cent in the third quarter. Mr Williamson said: ‘Some of this malaise has been blamed on paused spending decisions ahead of the Autumn Budget, but there’s a real chance this pause may turn into a downturn.
‘The drop in confidence about the year ahead reflects growing concerns that business conditions will remain tough in the coming months, largely linked to speculation that further demand-dampening measures will be introduced in the Budget.’
Borrowing for the seven months of the financial year so far, since April, is at £116.8 billion. That is £9.9 billion higher than was forecast in March.