The economy has shown resilience. Going forward the inflation shock from energy prices means GDP is expected to flatten, if not fall this year…

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…

According to the ONS, the UK economy grew by just 1.3% between July and September which is down on the previous quarter. The level of real quarterly GDP in the UK is still 2.1% below where it was before the coronavirus pandemic at the end of 2019. Though there was strong consumer spending in the third quarter, expansion was weaker than expected. 

After another £35.5 billion Sunak splurge in June, the UK’s debt has – not unexpectedly – finally reached the same size as the UK’s whole economy, at 99.6% of GDP. The highest debt to GDP ratio since 1961…

The UK’s debt now stands at £1.98 trillion, after figures show borrowing in the first quarter of the financial year was more than double the £55.4 billion seen in the whole of the previous year. The only tiny silver lining is that borrowing in June was lower than expected by most economists, and £10 billion less than May…

New figures released this morning show GDP rose by just 1.8%, when the economic consensus having expected growth of between 5 and 6%. In the preceding three months GDP fell by 19.1%, taking the UK economy back to levels not seen since the early 2000s. The UK economy was nearly a quarter smaller in May than February…

The Chancellor’s response to the news was grim, saying “today’s figures underline the scale of the challenge we face.” The Treasury is pointing to the economic support package announced last week, which obviously will not have had an effect on May’s figures. The news, however, is not a great start and will make No. 10 jittery about how likely the recovery is to be sharply V-shaped. Not good…

New figures published by the ONS this morning show the UK economy shrank by 2% in the first quarter of 2020, the biggest decline since Q4 of 2008, though less than the 2.5% experts had predicted; and March’s -5.8% being smaller than the expected 7.9% drop. Compared internationally, the UK holds up quite well. Though all countries will be bracing even harder for April’s figures…

The figures coincide with this morning’s Telegraph splash of internal Treasury estimates forecasting a £337 billion budget deficit by the end of this year – £282 billion higher than expected in the March Budget. In the base case scenario, the Treasury is advising Rishi Sunak he will have to increase taxes or cut spending to raise between £25–£30 billion a year.

In typical Treasury fashion, the Chancellor has been presented with options for raising taxes; with the leaked paper advising reliance on increasing income tax, National Insurance, VAT or corporation tax, or reform of pensions tax. Will Rishi want to go down in history as the top Tory tax-hiker?