Rachel Reeves was humiliated on Thursday as figures showed the economy slowing to a crawl – leaving Britain facing its ‘most dismal decade’ in a century.
The Office for National Statistics said gross domestic product increased by just 0.1 per cent in the final quarter of last year and 1.3 per cent for 2025 as a whole.
Economists said it showed Britain was firmly stuck in the slow lane – a far cry from the Chancellor’s claim that it was about to turn a corner.
The Government’s tax rises, steep minimum wage increase, botched business rates reform and workers’ rights rules are blamed for crushing business.
Former Bank of England rate-setter Andrew Sentance said the private sector was being ‘clobbered’ and the latest figures were ‘pretty compelling evidence that UK Government policies are not generating economic growth’.
Keir Starmer said the growth figures meant ‘more money back in your pocket’ but Mr Sentance said: ‘With such economically illiterate statements coming out of No 10, it is not surprising Starmer is in trouble’.
Mr Sentance said average annual growth in the 2020s is on course to be the weakest since the 1920s making it ‘the most dismal decade for growth in 100 years’.
The latest annual growth figure of 1.3 per cent meant Britain’s performance in Labour’s first full year back in office fell short of a 1.4 per cent estimate by the International Monetary Fund.
Chancellor Rachel Reeves (pictured) had previously boasted Britain was turning a corner
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Ms Reeves boasted at the time of that prediction that it showed Britain was turning a corner.
Quarterly figures also show the economy slowed sharply over the course of the year.
After growth of 0.7 per cent in the first quarter it stuttered to 0.2 per cent in the second quarter and just 0.1 per cent in each of the last two quarters of the year. Responding to the figures, Ms Reeves said: ‘We can’t turn things around overnight but we have created the conditions now for the economy to grow and it is doing just that.’
The Chancellor insisted that Labour’s policies ‘will help deliver stronger growth this year’. That contradicts the Bank of England, which thinks it will slow to 0.9 per cent in 2026.
Tory Shadow Chancellor Sir Mel Stride said: ‘Having promised growth and declared it her number one mission, growth has flatlined, GDP per head has also fallen for the second quarter in a row, and people are poorer because of Labour’s choices. It’s humiliating for the Chancellor.’
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