Labour’s growth pledge lies in tatters and I fear there is worse to come, says HUGO DUNCAN

The British economy has hit the buffers. And another Labour pledge lies in tatters.

Keir Starmer and Rachel Reeves promised to make Britain the fastest-growing economy in the G7.

But official figures on Friday show there was no UK growth at all in July. The economy is flatlining.

It could not come at a worse time for Labour as it lurches from one crisis to the next.

Angela Rayner and Peter Mandelson may have grabbed the headlines in recent days.

But it is the Chancellor who is responsible for our economy – and both she and it are floundering.

The Chancellor is responsible for our economy – and both she and it are floundering.

On Thursday, Reeves insisted ‘growth is our number one mission’. She is fooling no one.

All her talk of ‘growth’ has proved hollow since she unleashed a £40billion Budget tax bombshell on the country last October.

And now, instead of having the fastest-growing economy in the G7, we have the highest rate of inflation and the highest borrowing costs on international bond markets.

To make matters worse, unemployment is at a four-year high and more than 200,000 jobs have been lost since Labour came to power.

The big worry is there is worse to come – with Britain facing a new and painful era of stagflation when weak growth combines with rising prices.

Daily Mail Business Editor HUGO DUNCAN

Ministers have vowed to press ahead the job-destroying workers’ rights bill that will strangle business in red tape and cost firms £5billion a year.

And then there is the Budget, which has inexplicably been delayed until 26 November, setting the scene for weeks of speculation over how the Chancellor will plug the hole in her finances.

One thing is clear: her answer will not be to hack back the bloated state with cuts to public spending. 

Attempts to trim the welfare bill fell at the first hurdle amid opposition from her own MPs. Fiscal prudence is not the Labour way.

So, tax rises it is. And they are likely to be as self-defeating as they were last time around.

The sense of despair is palpable in boardrooms around the country – and the chorus of condemnation is growing louder.

This week alone, even before today’s dismal figures, Sir Jim Ratcliffe’s Ineos empire abandoned investment in the UK and US drugs giant Merck scrapped a £1billion research centre in London.

It didn’t stop there. French pharmaceuticals group Sanofi branded the UK ‘uninvestable’ and former Bank of England governor Mervyn King sounded the alarm over our towering debts.

The mood was summed up by Stuart Rose, the former boss of Marks & Spencer and one of the biggest beasts in British business.

‘We should all be worried about the state of Britain today,’ he said. ‘I believe we’re genuinely at the edge of a crisis.’

With the threat of stagflation looming large – and the UK government having to pay more to borrow than any other country in the OECD – he may well be right.

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