Gross domestic product (GDP) fell by a less than expected 0.2% in December 2021 to equal its pre-coronavirus pandemic level (February 2020). The consensus of economists was that GDP would fall 0.6%. Overall the UK economy recovered by 7.5% in 2021. The slight fall in December can be attributed to output in consumer-facing services falling by 3.0% in the month, mainly driven by a 3.7% fall in retail trade in the face of Omicron.
Pat McFadden, Labour’s Shadow Chief Secretary to the Treasury, responding to this morning’s weak GDP figures is audacious:
“The reality is the way the Government runs our economy is trapping us in a high tax, low growth cycle. Despite government bluster, with their current plans our position is not expected to improve. The latest Bank of England forecast suggests that growth will slow to a crawl next year. That would be the slowest growth of any G7 economy. Rising taxes, rising prices, and a squeeze on wages and living standards sit squarely on the shoulders of the Conservatives.”
Even if the low-tax rhetoric of Labour lacks credibility, it highlights the strategic Tory mistake of putting up taxes on workers and destroying their unique selling point as the party of low taxes. Labour points out that the Bank of England is predicting anaemic GDP growth could be as low as 1.25% for next year. The Tories choosing the high tax, low growth path is an open goal for Labour…