UK economic data delivered an update today that landed with a thud. GDP unexpectedly showed no growth during the month of July with analysts anticipating 0.2% growth.
The commentariat chattered that moribund growth will challenge the relatively new Labour government as it struggles to bolster a floundering economy.
Chancellor of the Exchequer Rachel Reeves commented on X that she is not under any illusions about the scale of the challenge.
I am under no illusion about the scale of the challenge we face after fourteen years of low economic growth.
That’s why we are taking the long-term decisions now to fix the foundations of our economy, so we can rebuild
Britain and make every part of the country better off.— Rachel Reeves (@RachelReevesMP) September 11, 2024
Some predict a more significant slowdown in the second half of the year.
Douglas Grant, Group CEO of Manx Financial Group, commented on the disappointing report:
“As economic recovery was showing signs of gathering pace, it was always going to be essential to equip SMEs with the support they need to flourish. SMEs are the backbone of our economy, driving innovation, creating jobs, and strengthening local communities. However, under the new Government it is clear, the ground is being prepared for substantial tax hikes which will negatively impact disposable income levels of consumers and SMEs alike. Until certainly comes back to the market, which will not be before the autumn statement on 30 October, there will be a stifling of investment as people and businesses alike re-assess their financial standing. Post this period of limbo, the Government needs to create in the autumn statement an environment where SMEs can thrive, innovate, and play a pivotal role in advancing the economy.”
Grant warned UK SMEs to prepare for “potential negative economic and policy shifts” that will be delivered during the Chancellor’s autumn statement in late October. He shared that in-house data indicates that nearly a third of UK SMEs have had to halt or pause parts of their operations due to financial constraints over the past few years.
Grant urged the new government to do more to support small businesses, cautioning that higher taxes will undermine growth.
“Currently, the absence of cohesive economic planning is fostering uncertainty.”
