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Stagnant GDP shows scale of challenge for Rachel Reeves at autumn budget

about 22 hours ago
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“Our economy isn’t broken, but it does feel stuck,” is the message from Rachel Reeves.Having made rebooting the economy the No 1 priority for government, it is a brutally honest assessment from a chancellor more than a year into the job.The latest GDP figures, released on Friday, highlight the scale of the challenge for Reeves at her autumn budget.Growth flatlined in July, slowing from 0.4% in June, as the economy struggled for momentum over the summer.

Some of the weakness can be explained away.Most economists had anticipated a slowdown after Britain recorded the strongest growth in the G7 in the first half of the year.Manufacturers and exporters had rushed to beat the introduction of Donald Trump’s tariffs early in 2025.However, with US stockpiles now filled, and global uncertainty weighing on industry, new orders have slumped – reflected by a 1.1% plunge in manufacturing output in July.

Tax changes this spring had also pulled forward activity in the property market and influenced car sales, leading to more monthly volatility in the GDP numbers.Households are under pressure from rising inflation.Consumer-facing services recorded no growth in July, despite a decent month for retailers as hot weather and England winning the Euro 2025 women’s football tournament helped to lift sales.But, taken together over the past three months, spending was in the doldrums, with a 0.6% slump in consumer-facing services.

The government also blames years of underinvestment under the Conservatives,But while it is evident that the economy has lacked a cash injection in recent years, there are also signs Reeves has added to the UK’s headwinds,Economists highlight the damage to businesses and jobs from the chancellor’s first autumn budget,Reeves’s £25bn rise in employer national insurance contributions (NICs) in particular has been blamed for hitting hiring demand and sapping investment,As the chancellor prepares for her second budget on 26 November, the challenge is considerable: growth is weak, yet tax increases or spending cuts could be required to cover an anticipated shortfall in the government finances.

Business leaders warn that any further tax rises would add to the considerable headwinds facing the economy, by sapping investment and hitting consumer spending.Government spending cuts would be hugely politically damaging.Bond market investors are watching closely.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionAmong the big concerns is that speculation over the tax changes in the budget will dampen business activity over the coming months, even before November arrives, in a carbon copy of Labour’s first months back in office last year.Meanwhile, the global backdrop remains challenging as Trump’s tariff policies weigh on international trade.

Household finances in the UK are being squeezed afresh by elevated inflation, while pay growth is slowing – hitting consumer spending power.On the more positive side, growth is clearly under pressure but is not collapsing.The latest snapshot of private sector business activity from the monthly services PMI suggested August was a robust month.Most economists – including those at the International Monetary Fund – anticipate growth this year of just over 1%.While historically weak, it is growth all the same despite the challenges.

Politically, however, a message that the economy is just about muddling through is hardly helpful.For the chancellor it will be a high-stakes challenge to unstick the British economy.
societySee all
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Children detained under Mental Health Act held for hours in A&E departments

Children as young as nine detained under the Mental Health Act are spending hours in NHS accident and emergency departments under police control rather than in specialist mental health assessment suites.The detention under the act of children in England and Wales in police cells was banned in 2017 but a lack of suitable options has led to the use of A&E departments.Research to be presented at a British Sociological Association conference at Northumbria University on Friday found that 187 nine-to-18-year-olds were detained under the act in a single constituency in the north of England between 2017 and 2021. Three-quarters were taken to A&E, where legally they could wait for up to 24 hours, accompanied by police officers, until they were assessed.It was mainly children aged 16 and over who were able to access adult facilities who were taken to specialist suites under the care of trained mental health staff

about 23 hours ago
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Hospices ‘on the brink’ financially if assisted dying is legalised

Hospices are “on the brink” and two in five are making cuts this year despite the importance of end-of-life care if assisted dying becomes legal, the sector has warned before the first House of Lords debate on the legislation.Hospice UK, which represents the sector, said many were financially struggling and still “in the dark” about how funding for end-of-life care will be improved when assisted dying legislation is passed.The terminally ill adults (end of life) legislation is due to have its second reading in the House of Lords on Friday, with Charlie Falconer, a Labour peer and the co-sponsor of the bill, taking over from the MP Kim Leadbeater.Before the debate, in which 190 peers have put their name down to speak, Falconer expressed optimism that it will pass through the Lords in time for it to become law by the spring.“There is more than enough time for the Lords to scrutinise the bill and return it to the Commons before the end of the parliamentary session,” he said

1 day ago
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Cost of place in children’s care homes in England hits almost £320,000 a year

The cost of a single place in a residential children’s care home in England has nearly doubled in five years to an average £318,000 a year, with private firms racking up huge profits as a result of market failure, according to the public spending watchdog.The £3bn children’s homes market, which is increasingly dominated by private firms, some funded by private equity, is “dysfunctional” and too often fails to deliver a good service for youngsters or value for money, a National Audit Office (NAO) report said.In the most extreme instances – likely to involve children with complex needs who require 24-hour supervision by multiple staff – councils had been charged up to £63,000 a week (£3.3m a year) for a single placement, the NAO said.Privately owned care firms ramped up fees above the rate of inflation, with the biggest providers enjoying average annual profit rates of 22

1 day ago
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Girls who play after-school sport in UK 50% more likely to later get top jobs, study finds

Girls who play after-school sport in the UK are 50% more likely to get top jobs later in life, according to research, which reveals that the boost is equivalent to a university degree.Despite this benefit, girls are far less likely to play sport than boys, with 11- to 18-year-olds each missing out on 1.4 hours a week, or 280m hours annually, with 340,000 more girls excluded due to cost and lack of local access, according to the research. One in three girls surveyed for the report said boys had access to a wider range of sports.The research found that women who played extracurricular sport as children were much more likely to reach senior professional roles

2 days ago
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Boom times and total burnout: three days at Europe’s biggest pornography conference

The crowd that gathers in Amsterdam is exuberant. Pornography use is more common than ever, so earnings for many here are through the roof. But there is trouble afoot, from AI to chronic illness …Brittany Andrews, a cheerful American porn star, cuts to the chase in her workshop on how to succeed in the adult industry.“Do you think about how much money you’re going to make before you make a clip? Do you know what stuff sells the best? Or do you just follow your creative spark?” she asks. She points to a young Ukrainian model in a gold sequined bra and denim shorts

2 days ago
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More than half of UK births now involve medical intervention, audit finds

More than half of women having a baby in Britain now do so with the help of medical intervention, an audit of NHS maternity care has revealed.Of the 592,594 births that took place in 2023, 50.6% involved either a caesarean section or the use of instruments such as forceps or a ventouse suction cup.Experts said the rise in medically assisted deliveries represented a “major shift” driven by births becoming more complicated in recent years, partly because more older or obese women are having babies.The increasing regularity of medical intervention is largely down to the sharp rise in caesarean births, in which the baby is delivered during an operation

2 days ago
technologySee all
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Skip Apple’s new iPhone – five tips to make your old phone feel new again

3 days ago
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How to Save the Internet by Nick Clegg review – spinning Silicon Valley

3 days ago
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Apple debuts thinner, $999 iPhone Air at ‘awe-dropping’ annual product event

3 days ago
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How Google dodged a major breakup – and why OpenAI is to thank for it

4 days ago
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The women in love with AI companions: ‘I vowed to my chatbot that I wouldn’t leave him’

4 days ago
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Meta hid harms to children from VR products, whistleblowers allege

4 days ago