UK economy sees ‘meagre’ 0.1% growth in August as Reeves weighs up tax hikes on wealthy
Britain’s economy eked out growth in August, but it was weaker than forecast and official figures revealed a surprise contraction in July after a downward revision.
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The Office for National Statistics (ONS) said gross domestic product (GDP) rose by 0.1% month-on-month in August and fell by 0.1% in July, in a revision to the previous estimate for no growth.
Most economists had been expecting an expansion of 0.2% in August.
In the three months to August, GDP grew by 0.3% compared with 0.2% growth in the three months to July, the ONS added.
Liz McKeown, director of economic statistics at the ONS, said: “Services growth held steady, while there was a smaller drag from production than previously.
“Continued strength in business rental and leasing and healthcare were the main contributors to services growth, partially offset by weakness in some consumer facing services, while wholesalers also fared poorly.”
This comes as it emerged the Chancellor is considering a tax on the wealthy in her upcoming autumn budget.
Rachel Reeves has said higher taxes on the wealthy will be “part of the story” in her budget next month, as she looks to fill an estimated £50 billion black hole.
The Chancellor acknowledged she was looking at potential tax rises and spending cuts to plug gaps in her autumn budget, which she said had appeared due to the lingering impact of Brexit.
Ms Reeves announced tax rises worth £40 billion a year at her first budget last November, including hikes to payroll taxes paid by employers, and insisted she would not repeat such rises in subsequent years.
But With no boom in economic growth, stubbornly high inflation and the mounting costs of government debt, some economists believe Reeves will have to raise another £50 billion in the November 26 statement.
She also said there had been scaremongering over her decisions that hit the pockets of the wealthy as she all but confirmed a tax hike for the wealthy to The Guardian during a trip to Washington for the International Monetary Fund (IMF) meeting.
"Last year, when we announced things like the non-doms, like the (tax increase for) private equity, like the VAT on private school fees, there was so much bleating that it wasn’t going to raise the money – that people would leave," Ms Reeves said.
"The Office for Budget Responsibility will publish updated numbers on all of those things. And that scaremongering didn’t pay off, because this is a brilliant country and people want to live here."
Before the Chancellor departed for the US, she told Sky News that “of course, we’re looking at tax and spending”.