Labour is dragging Britain into a RECESSION as growth grinds to halt post-election, Keir Starmer is warned

LABOUR has been accused of talking the UK economy into a recession after growth ground to a halt after the election.

Official figures show the economy had zero growth between July and September with economists warning there is a risk the UK could have shrunk in the last three months of the year.

Liz McKeown, director of economic statistics at the ONS, said that the economy was weaker than previously suggested as people cut back on spending in bars and restaurants and advertising spend also fell.

Living standards were also lower than expected with GDP per head falling by 0.2 per cent, rather than remaining flat.

Chancellor Rachel Reeves said the figures showed the “challenge we face to fix our economy and properly fund our public finances after 15 years of neglect is huge”.

However, she has faced intense criticism that her gloomy warnings had talked down the economy.

Simon French, chief economist at Panmure Liberum, was one of many voices who warned that a recession couldn’t be ruled out.

He said that the biggest risk to the economy was the burden on employers had been “too much, too fast”.

Mr French said the Chancellor’s messaging over a “painful” budget was “entirely self-defeating to the mission of economic growth, and those words came with a cost in a way they didn’t in opposition.”

Recent figures show GDP shrank in October, before the full-scale of the Budget at the end of the month was felt.

A slew of surveys since the Budget’s £24 billion tax raid on business have shown the biggest plunge in confidence since the early days of the pandemic as firms halt investment, hiring and slash jobs.

Economists fear 2025 will be even harder as companies will face rising inflation across the supply chain as firms rush to cover the huge increase in costs from the Budget.

Andrew Griffith, shadow business secretary, said: “Labour have really killed, plucked and cooked the UK economic goose”.

He added that a summer “summer of trash talking the economy, an autumn tax-hiking budget and now a winter of discontent with a recession a distinct possibility.”

It follows the Confederation of British Industry warning the UK economy was “headed for the worst of all worlds” with a steep decline in growth next year as firms cut investment and hiring after the battering from the Budget.

The threat of inflation creeping higher again as a result of the Budget will also mean interest rates will stay higher, which will be another drag on investment and consumer spending.