A top Cabinet ministers insists the economy is ‘turning corner’ but also pledges to do whatever it takes to trigger growth after inheriting a mess from the Tories
Business Secretary Peter Kyle has signalled the government is prepared to take drastic action to “shock” the economy back to life.
Pledging to do take steps that were “profoundly different”, Mr Kyle laid bare the huge challenges still facing Labour after 14 years of Tory rule. “I would frame this as we inherited a growth emergency and we are still in it,” he said. His blunt assessment came despite insisting the economy was showing signs of “turning a corner”.
It came amid reports that Britain’s economic watchdog will this week downgrade its growth forecasts for the UK for 2026 and for the remaining years of the current parliament. Sky News claimed the Office for Budget Responsibility has delivered the blow to Chancellor Rachel Reeves, who will confirm the go-slow in the Budget on Wednesday.
Ms Reeves is expected to raise taxes to fund an expected £20billon to £30 billion hit to the public finances from the OBR’s weaker growth outlook, higher debt costs and other factors.
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Mr Kyle, who was appointed Business Secretary at the start of September, told delegates at business group the CBI’s annual conference in London: “We inherited a situation when we came into office where we were stuck in this vice-like grip of high taxes and low growth. We are not going to break out of this cycle unless we do some pretty profoundly different things.
“I would frame this as we inherited a growth emergency and we are still in it and we will be in it for as long as we are unable to get our way out of this situation without relying on increased economic productivity as opposed to just the normal tax rises or government cuts.”
Citing promised planning reforms, he went on: “In an emergency environment situation you have licence to do things you don’t do at other times and I am looking really at what those measures are. What are the things we can do to shock our economy into growth, to inspire our economy into growth.”
Mr Kyle did not expand on what the ‘shock’ measures may turn out to be, or the options, but it indicates the government is worried things may take a turn for the worse.
Recent figures from the Office for National Statistics showed growth slowed to just 0.1% in the third quarter of this year.
Mr Kyle insisted: “Inflation is down, the Bank of England has cut rates five times since the election, real wages are growing and we were the fastest growing G7 economy over the first half of this year and the IMF forecasts the UK will be the second fastest growing economy in the G7 for the whole year, behind only the United States.
“Despite global conflicts the threat of new tariffs, rising international borrowing costs, because of the choices we have made we have been able to show we are slowly but surely turning a corner and unlocking economic momentum that our country craves.”
Repeating a theme of his speech, Mr Kyle pledged to be “relentless” when it came to change. “I have never accepted no to answer,” he added, highlighting challenges he has faced during his growing-up, including dyslexia.
“The message is, if you are bloody minded and are bloody minded to get things down, it works.”