Business leaders have issued a plea to Rachel Reeves not to impose more burdens on employers as new official figures showed economic growth was slowing. Growth slowed to just 0.1% over three months, in a blow to Ms Reeves ahead of the autumn Budget. The Chancellor attempted to blame a cyber-attack which halted production at carmaker Jaguar Land Rover, but food and drink manufacturers warned the Chancellor’s tax rises, introduced in last year’s Budget when she increased National Insurance contributions for employers, had damaged investment and put up high street prices.
The British Chambers of Commerce insisted: “There must be no more taxes on business in November’s Budget.” Shadow Chancellor Sir Mel Stride said: “The economy shrank in the latest month, under a Prime Minister and Chancellor who are in office but not in power.”
Sir Mel highlighted Prime Minister Sir Keir Starmer’s decision to bring his own economic experts into Number 10, and the open warfare between Downing Street officials and Cabinet Ministers including Health Secretary Wes Streeting. Sir Mel said: “Months after the Prime Minister stripped the Chancellor of responsibility for the Budget, Keir Starmer has now lost control of his own Downing Street operation – with his team openly at war with his Cabinet.
“If the Prime Minister does not have the backbone to control his team, he has no hope of reducing spending. Only the Conservatives have a leader with a backbone and a plan to deliver £47 billion of savings – allowing us to cut tax and cut the deficit.”
Economic growth was half the predicted figure of 0.2% for the period between July and September, down from a 0.3% increase between April and June. The disappointing economic data came after figures earlier this week showed UK unemployment rose to 5%, the highest level for four years
Ms Reeves blamed a five-week shutdown at the UK’s largest car manufacturers, Jaguar Land Rover, following a cyber-attack which shut down IT systems.
She said: “As a result, car manufacturing fell almost 30% in September. Jaguar Land Rover is now back up and running in part because of the support this Government put in, both to help with the cyber attack itself and also to support the supply chain, so that that business has now begun car production again.”
The UK remains the “fastest-growing economy in the G7” this year to date, Ms Reeves added, though she acknowledged US figures are still yet to be published.
Her Budget on November 26 will focus on cutting NHS waiting lists, reducing the cost of living and bringing down the national debt, she said.
But the Food and Drink Federation said nine out of ten food manufacturers were feeling “pessimistic” about the Budget – while two thirds said they had either cut staff numbers or were planning to do so thanks to the National Insurance increase introduced last year.
And Stuart Morrison, Research Manager at the British Chambers of Commerce, said: “The lack of strong, consistent growth means this month’s Budget is a make-or-break moment for business – it must deliver for firms across the UK. Our latest survey of over 4,600 businesses shows a quarter have scaled back their investment plans, and a fifth are expecting their turnover to worsen over the next year.
“That’s why we are clear, there must be no more taxes on business in November’s Budget. The Chancellor must also use her statement to tackle the skills crisis, help firms export and turbocharge infrastructure projects.
“She faces difficult choices, but hitting businesses in the pocket again would be the wrong move.”
Unions also raised concerns and Unite general secretary Sharon Graham said: “The UK economy is on life support. We have low growth, rising unemployment and a deepening cost of living crisis. Workers and communities cannot continue to pay the price.”
