Growth slows as businesses face rising costs – Chamber

Slower than expected economic growth between July and September underlines the challenges facing the new Government, business leaders said today.

The UK's economy slowed by more than expected – growing by just 0.1 per cent over the period, according to the Office for National Statistics.

Some economists said that concerns about what measures would be included in October's Budget had affected decision making by firms and households.

Analysts had expected the economy to grow by 0.2 per cent during the latest quarter, following 0.5 per cent expansion in the April to June period.

It was affected by a weak performance in the services sector - which accounts for more than three-quarters of the economy - which grew by just 0.1 per cent.

Raj Kandola (pictured), director of external affairs at Greater Birmingham Chambers of Commerce, said: “The latest GDP figures underline the challenges the new Government is facing as growth over the last quarter remained tepid and slightly lower than expected.

“Analysis from our last Quarterly Business Report revealed a drop in investment levels - a likely reflection of the uncertainty we saw in the run up to the Budget.

“Whilst businesses appreciate the fiscal challenges the Government inherited from its predecessors, it's undeniable that the measures announced in the Budget will simply add to the cost pressures many face on a daily basis.

“With the pace of future interest rate cuts likely to tail off, the Government needs to move quickly and establish a narrative that will give businesses the confidence they need to invest and grow.

“The Chancellor's Mansion House speech on pension reform is a step in the right direction but much more will need to be done to stimulate firm level investment, reduce overheads and actually make it easier to hire staff in the coming months.”