Andy Burnham has been urged to take “urgent” action to rescue Britain’s economy and save jobs, with Treasury experts warning growth could be just 0.3% next year. Growth of 1.6% had been forecast for 2027, but officials have briefed the prime minister that the country will barely grow if disruption caused by the Iran crisis continues in the Strait of Hormuz – one of the world’s main supply routes for energy exports.
Growth Figures and Treasury Warnings
The latest quarterly figures show gross domestic product (GDP) rose by 0.4% between April and June. Low but better-than-forecast growth of 0.3% in June is linked to hospitality and leisure firms getting a boost from the World Cup and sunny weather.
Treasury modelling presented to the Prime Minister and the Chancellor shows the economy could grow by just 0.9% this year if no permanent peace deal is secured to end the Iran conflict. This is less than the 1.1% forecast by the Office for Budget Responsibility (OBR). In this extreme scenario, inflation could peak at 4.3% in the first quarter of next year.
Experts Call for U-Turns on Energy and Taxes
Karl Williams of the Centre for Policy Studies urged the Government to stage u-turns to protect the economy. He told the Express: “Andy Burnham is unlikely to be able to affect what happens in the Strait of Hormuz. What he can do is strengthen our economy and make Britain more resilient to external shocks like the conflict in Iran. Reversing his predecessor's damaging tax rises on businesses and workers, allowing new domestic oil and gas production – offshore and onshore – to proceed, and pushing forward a raft of deregulatory reforms to make it easier to build housing and infrastructure would be a good start.”
Fred de Fosssard, director of strategy at the Prosperity Institute, warned: “Britain is in a precarious position economically. We have high debt, extreme energy prices and a growing unemployment crisis. The Prime Minister should take urgent measures to cut energy costs, business overheads, and get the labour market moving again. He should do an emergency package of policies to approve more extraction of Britain's North Sea oil and gas, speed up the approval and construction of new nuclear power, and repeal costly laws like the Employment Rights Act which have frozen the jobs market.
“These are the kind of policies which would improve British resilience and support British businesses.”
Conservative Criticism
Shadow Chancellor Sir Mel Stride accused Labour of lacking a “plan for growth”. He said: “Thanks to their spend, tax and borrow addiction, Britain is vulnerable to the effects of shocks like the Iran War. Yet Andy Burnham looks set to make the same mistakes Starmer and Reeves did by doubling down on those failures. Labour's poor decisions have stifled growth, destroyed jobs and made the cost of living worse. The Conservatives are the only party with a plan to cut spending, cut taxes and get Britain working again, delivering a stronger economy and stronger country.”
