Ahead of tax increases taking effect in April, businesses have repeatedly warned the extra costs they face, along with minimum wages rising and business rates relief being reduced, could impact the economy’s ability to grow, with employers expecting to have less cash to give pay rises and create new jobs.
In the three months to November, the economy is estimated to have shown no growth, the Office for National Statistics (ONS) said. It has only grown twice in the five months since Labour took office.
Danni Hewson, AJ Bell head of financial analysis, said the bigger economic picture was one of an “economy still stuck in the muck”, while Ben Jones, lead economist at the CBI business group which claims to represent 170,000 firms, said a “mood of caution seems to have settled over UK businesses”.
“We’ve had a pretty gloomy start to this year,” said Liz Martins, senior economist at HSBC. “We’re not in recession, but we’re not doing much growing either.”
In a bid to turn the tide, Reeves will meet representatives from some of the country’s biggest regulators later, including energy watchdog Ofgem and the Competitions and Markets Authority, to get ideas for growing the economy.
Reeves is understood to have decided to meet them in-person rather than wait to read submissions, with a Treasury source describing the meeting as “a kick up the backside”.
