The UK economy “flatlining” could mean little change for interest rates and ramp up calls for tax cuts, according to GB News’ Liam Halligan.
It comes amid signs that the UK’s job market is slowing down, with the unemployment rate sitting at 4.2 per cent between June and August, up from 4 per cent from the March-to-May quarter.
As prices rise and higher interest rates start to bite, businesses appear to be hiring less.
GB News Economics and Business Editor Liam Halligan says Chancellor Jeremy Hunt faces an “unhappy picture”, with tax revenue coming in less than he might want.
Jeremy Hunt could be under pressure, says Liam Halligan
PA / GB News
He added that Britain is “battling” recession with 14 interest rate rises in a row “really starting to feed through”.
“The Bank of England will stand accused of driving the economy into a recession”, he said.
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“We’ve already got 14 interest rate rises in the tank and they’re now really starting to feed through.
“You can see it in the credit numbers, the demand for credit, the amount of credit banks are extending. That’s slowing down the economy quite seriously now.
“The British economy is still battling, battling, battling. We’re not yet in recession.”
As the economic picture continues to pose a troublesome outlook for the Government, Halligan says he anticipates pressure on the Chancellor from Tory MPs to force lower taxes.
Jacob Rees-Mogg is calling for lower taxes
PAHe added the number of backbenchers calling for lower taxation could outnumber those likely to side with the Government, potentially throwing up the threat of a no confidence vote.
“The economy always dominates politics in the end”, he said.
“Rishi Sunak did steady the ship after Liz Truss, but it’s not as if the UK economy is booming, and the other thing about these slow growth numbers is they are really going to put the pressure on Jeremy Hunt.
“You’ve got former ministers like Jake Berry, Ranil Jayawardena, Jacob Rees-Mogg, Priri Patel and Liz Truss part of the Conservative Growth Group, which I hear is now at 65 MPs, bigger than the Government’s majority.
“If this autumn statement on the 22nd November tries to put taxes up, a lot of Tory MPs aren’t going to vote for it and then you could have a no confidence issue.”
The Bank of England began raising rates in December 2021 in a bid to control soaring consumer price rates.
It has become a vicious cycle for the Bank with rates causing consumers and businesses to spend and invest less.
A general election is widely expected next year, and the UK's spluttering economy is set to be a key battleground for the Tories and Labour.