Who’s to blame for Britain’s slowing economy?

The economy is slowing down. GDP grew 0.3 per cent in the three months to August. As ever, services propped up Britain, growing by 0.4 per cent, while the production sector shrank by 0.3 per cent, according to Office for National Statistics data.

That growth over the last three months though was helped by a bumper June with the economy flat over the latest two months. If things don’t improve in the September data, then we could have news of a stagnating economy confirmed just in time for Rachel Reeves’s second Budget.

Inflation too, as we have been pointing out for months, does not seem to be going away – and when combined with the growth figures it looks like we’re in for a nasty period of stagflation.

That combination makes things tricky for the Bank of England’s rate setters who next meet at the start of November. On the one hand, the flatlining economy will put pressure on them to cut rates, but that will be very difficult for them to do given the International Monetary Fund (IMF) has just pointed out Britain will have the highest inflation of any major economy well into next year.

Labour are happier about another section of the IMF report that finds we’ll be the second fastest growing G7 economy this year, but given that amounts to growth of just 1.3 per cent we’re not really shooting for the stars. Worse still, on a per capita basis the IMF forecasts actually have us growing slower than anyone else next year, so we’re not all about to feel much richer anyway.

The November Budget will no doubt be full of platitudes about growth, perhaps even sincerely believed ones, but it is increasingly hard to reconcile that growth mission against policies to tax employers to the tune of billions, drown them in red tape and massively extend the power to strike and sue as the employment rights bill will do. If Labour and Reeves are serious about jumpstarting the economy, they’re going to have to realise that they can’t have it all.