Rachel Reeves has been dealt a major blow after it was revealed Britain’s economy shrank in January.
The grim data was unveiled this morning by the Office for National Statistics (ONS).
They said the fall in gross domestic product (GDP) was mainly down to a contraction in the production sector.
The figures come despite Labour insisting that boosting economic growth is its “number one mission”.
They will also pile more pressure on the chancellor ahead of her spring statement later this month.
ONS director of economic statistics, Liz McKeown, said: “The fall in January was driven by a notable slowdown in manufacturing, with oil and gas extraction and construction also having weak months.”
Reeves said: “The world has changed and across the globe we are feeling the consequences.
“That’s why we are going further and faster to protect our country, reform our public services and kickstart economic growth to deliver on our plan for change.
“And why we are launching the biggest sustained increase in defence spending since the Cold War, fundamentally reshaping the British state to deliver for working people and their families; and taking on the blockers to get Britain building again.”
The January figures are a marked downturn on December, when the economy grew by 0.4%.
Shadow chancellor Mel Stride said: “It is no surprise that growth is down again, following near no growth in the last three months of 2024.
“After consistently talking Britain down, raising taxes to record highs and crushing business with their extreme employment legislation this government is a growth killer.
“Labour inherited the fastest growing economy in the G7 but since they arrived business confidence has collapsed and jobs are being lost.
“The chancellor has 12 days until her emergency Budget – she must think again or hardworking people will continue to pay the price of a Labour government without any business experience.”
Liberal Democrat Treasury spokesperson Daisy Cooper said: “The chancellor’s wretched Budget has left our economy on life support so the spring statement must deliver a much needed shot in the arm.
“Just as the chancellor’s jobs tax is set to hammer small businesses and plunge high streets into despair, the government’s refusal to negotiate a bespoke UK-EU customs union to unleash economic growth is baffling.
“The chancellor must admit that her Budget has failed to reverse the years of Conservative economic vandalism and put forward a new plan that unleashes the growth potential of small businesses up and down the land.”
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