Reeves warned tax rises may further damage growth

ONS reveals economy has stalled for second month in a row

- KATE DEVLIN

Rachel Reeves has been warned that expected tax rises in October’s Budget could damage growth, after suprise new figures showed the economy flatlining.

Economists said there could be further misery ahead as a result of the chancellor’s decisions and higher energy bills this winter.

In May, the chief economist at the Office for National Statistics (ONS) described the economy as “going gangbusters”.

But the latest figures unexpectedly showed growth has stalled for the second month in a row. The ONS gross domestic product (GDP) recorded no growth in July.

In response, the chancellor said: “I am under no illusion about the scale of the challenge we face and I will be honest with the British people that change will not happen overnight” as she hit out at “14 years of stagnation” under the Conservatives.

She also defended her government’s difficult decisions, including axing the winter fuel payments for almost 10 million pensioners, suggesting the latest figures highlighted why they were necessary.