Chancellor Jeremy Hunt has been warned that Britain could already be in a technical recession, despite the government's claims of an economic recovery.
Hunt has insisted the government's plan “is working”, as he continues to raise the prospect of further tax cuts in his March budget.
But leading economists have said new analysis of the UK's poor growth figures suggests the country has suffered a major crisis.
Martin Beck, chief economic adviser to forecasters the EY ITEM Club, said there is a “good chance” the British economy will have contracted by the end of 2023 and fallen into a recession.
After the 0.1 percent drop between July and September, a drop in the final quarter would mean a “technical” recession of two negative quarters in a row, Beck said.
“We know that GDP (gross domestic product) contracted in the third quarter and, looking at the high-frequency figures for the fourth quarter, there is a good chance that it may have contracted slightly again,” he told BBC Radio 4. Today program.
Rishi Sunak and Jeremy Hunt under pressure to boost growth and control inflation, as well as cut taxes
(Getty Images)
The EY ITEM Club expects the economy to recover somewhat this year, revising its 2024 growth estimate from 0.7 per cent to 0.9 per cent.
But the weak outlook is not helping Rishi Sunak and Hunt make the case that they have got the economy growing again – one of their big five promises – as the Prime Minister tells voters to “stick to the plan”.
The recession warning comes as Rishi Sunak ruled out the idea of replacing Hunt, insisting he will remain chancellor in this year's general election.
Asked during a visit to Buckinghamshire whether Hunt would remain in his job when the country went to the polls, Sunak told reporters: “Yes.”
The Prime Minister added: “We would like to do more where we are responsible for doing so, but as we have seen with the latest inflation data, inflation is not falling in a straight line, it is not a fact, there is still work to do.” to do, and that is why it is important that we stick to the plan.”
Reports last year suggested Hunt would stay on for the autumn statement and budget, but there was a question mark over his long-term future. Sunak has until January 2025 to hold an election, but has said he is working to hold them in the second half of 2024.
Hunt has again signaled he will cut taxes in his March 6 budget. In an opinion piece for the ConservativeHome On his website, he said the Conservative party had a “track record” of cutting taxes and promised that voters “will see it as we emerge from the turmoil of recent years.”
Hunt has compared himself to tax-cutting former Chancellor Nigel Lawson over the weekend as he and the Prime Minister raised the prospect of more handouts at the March 6 tax event.
In an opinion piece for the mail on sundayHe insisted the “government plan is working” and compared his record to that of the party's late great, who cut personal taxes while serving in Margaret Thatcher's government.
Meanwhile, Sunak and Hunt are under pressure from Tory MPs to push the council funding deal back from the brink.
More than 40 Conservative MPs have signed a letter to the Prime Minister warning that without emergency money, many councils will be forced to cut crucial frontline services and increase council taxes in an election year.
