McFadden warns of “Tory doom loop” following weak UK growth projection

Labour’s Pat McFadden has warned of a “Tory doom loop” in response to a report forecasting that the UK will be the second worst performing economy in the G20 over the next two years.

According to research released by the Organisation for Economic Co-operation and Development (OECD) today, the UK will be the second weakest economic performer of the G20 nations, with only Russia facing a greater contraction in 2023.

Commenting on the figures, the Shadow Chief Secretary to the Treasury said: “Today’s figures from the OECD are yet more evidence of the Tories’ 12 years of economic failure.

“Next year, we will have the lowest growth in the G20 bar Russia. And we are forecast to be the only OECD economy that will be smaller in 2024 than it was in 2019.

“This is the Tory doom loop. A low growth spiral leading to higher taxes, lower investment, squeezed wages and poor public services. And they have no plan to get us out of it.

“Labour has a plan to grow the economy, with a modern industrial strategy that works in partnership with businesses and a green prosperity plan creating good jobs across the country in the world-leading industries of the future.”

The OECD predicts that the UK economy will grow by 4.4% this year, before contracting by 0.4% in 2023. The organisation forecasts that the UK economy will expand by just 0.2% the following year – its lowest projection for any major economy apart from Russia.

Germany is the only other G7 nation predicted to see negative growth in 2023, with the OECD projecting that its economy will contract by 0.3%. Japan’s economy is forecast to grow by 1.8%, while Canada is expected to see growth of 1% and France is projected to see a rise of 0.6%.

The Office for Budget Responsibility (OBR) predicted last week that UK households will face the biggest fall in living standards since records began. It concluded that the country had entered a recession in the third quarter of this year and expects the current downturn to last “just over a year”.

The OBR said the medium-term fiscal outlook has “materially worsened” since March “due to a weaker economy, higher interest rates and higher inflation”.

It now projects that the UK economy will shrink by 1.4% in 2023, before growing by 1.3% the following year – a smaller increase than its previous forecast of 2.1%.

Jeremy Hunt delivered his long-awaited autumn statement last week, setting out a large number of measures including reducing the 45% income tax threshold from £150,000 to £125,140 and introducing threshold freezes for income tax and inheritance tax for two years on top of an existing four-year freeze.

The Chancellor also announced that the government’s levy on the profits of oil and gas companies will be raised from 25% to 35% and confirmed a new temporary 45% levy on electricity producers.

Responding to the Chancellor’s statement, Rachel Reeves warned that the UK has “fantastic strengths” but is being “held back” by “mistakes” made by the Conservative government and argued that we need a “serious long-term plan to get our economy growing again”.

The Shadow Chancellor argued that the country needs to “break free from this vicious cycle of stagnation, with fairer choices and a proper plan for growth” but that “instead of learning from the mistakes of the last decade, [the Conservatives are] simply repeating them”.