The landscape of the UK economy is a topic of significant concern as it barely grows amidst rising fears surrounding the recent Budget. This ongoing situation impacts both businesses and consumers alike ...
Fears surrounding the Budget continue to loom large!
The latest figures indicate a sharp slowdown, marking a significant drop from the previous growth rate of 0.5% observed in the April to June period. Economists and business leaders alike are voicing their apprehensions, attributing much of this stagnation to uncertainties introduced by new tax measures.
Chancellor Rachel Reeves expressed dissatisfaction with the latest growth figures and highlighted the slow expansion witnessed during the initial phase of the new government's tenure. Critics, including major companies like Marks & Spencer, Sainsbury's, and JD Sports, have pointed fingers at the tax increases announced in the Budget!
They suggest these measures are leading to elevated prices and a reduction in job opportunities. Such concerns resonate throughout the economy as businesses report a notable chill in decision-making processes, sparking a nationwide conversation about sustainable growth.
One of the significant contributors to the subdued growth has been the lethargy observed within the services sector. Recent reports indicate that it only managed to grow by a meagre 0.1% over the last quarter and shockingly registered no growth at all in September.
This stagnation raises questions about consumer confidence, with many feeling apprehensive about spending in light of the Budget's implications. A number of restaurant managers have noted a downturn in footfall leading up to the Budget announcement and more so following it, reflecting a broader cautious attitude among consumers.
"Despite these challenges, some economists maintain an optimistic stance!"
I suggest that while the UK economy has encountered numerous obstacles, it is not necessarily on the brink of recession. Nonetheless, I feel that the economy's momentum is waning, having only shown growth in two out of the past six months. The lingering questions regarding the Budget's content have influenced behaviour in both businesses and households.
In response to these concerns, the Chancellor emphasised that economic growth remains the government's primary mission. However, the Office for Budget Responsibility warned that the recent Budget would only provide a temporary boost, failing to create lasting impacts on the economy's overall size in the long term. The new tax measures really could be the final blow for struggling small businesses.
"It has become vital for the government to strike a balance between necessary fiscal measures and the need for sustained growth!"
The current economic environment serves as a reminder of the delicate interplay between policy, business confidence, and consumer behaviour, where every decision could ripple through the economy, impacting livelihoods and the very fabric of society. I know that such dynamics underscore the urgency for decisive yet judicious actions as the nation navigates through these turbulent economic waters.
As it stands, I think the future trajectory of the UK economy still remains uncertain, and fears surrounding the Budget continue to loom large.
Until next time ...
ROGER EDDOWES Business Godparent
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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