UK economy news – latest: Hunt says ‘tough road ahead’ as ‘very bleak’ recession looms

It is a grim outlook, for living standards, for the public finances and public services – and for hopes that Brexit would unleash a higher trend rate of economic growth.

Britain’s military has been placed on stand-by to fill in for Border Force officials if planned strikes by government staff go ahead this winter.

Public and Commercial Services (PCS) union bosses warn of “extraordinary disruption” at airports and key ports like Dover after members voted for industrial action.

Some 100,000 workers in over 120 government departments and public bodies – including the Home Office and Border Force – are set to walk out over pay in a series of “sustained” strikes.

Chancellor Jeremy Hunt appeared to reject comments made by his predecessor Kwasi Kwarteng, after he said that the new administration cannot blame Liz Truss’s government for the massive black hole in the nation’s finances.

Mr Hunt said on Friday there was “some choice” over the fiscal rules a government follows, but insisted that the UK had to “pay its way”.

“Well, there is some choice over the rules, or the fiscal rules, that you choose to follow, but there isn’t uncertainty about a basic choice we make as a country, which is whether we’re going to pay our way.

“And if we don’t give that certainty to the world, what we’ll see is higher interest rates, higher inflation, more instability, and more worries for families and businesses.

“And that’s why it’s so important to show the world that we are a country that pays our way.”

Chancellor Jeremy Hunt is said to be planning to cut planned growth in day-to-day public spending from 3.7 per cent to as little as 1 per cent after 2025 – a squeeze that would mark a return to austerity.

The Treasury is modelling for public spending rises of between 1 and 2 per cent prior ahead of next week’s autumn Budget, according to The Times.

It would cut budgets at government departments outside protected areas like the NHS because of rises well below inflation.

Labour shadow chancellor Rachel Revees said “all the Tories offer yet again is austerity”, while TUC boss Frances O’Grady said: “Sunak and Hunt must not repeat the mistakes of Cameron and Osborne.”

Chancellor Jeremy Hunt was pressed on the likelihood of the UK entering a recession, after the latest GDP figures found the UK economy had shrunk by 0.2 per cent between July and September.

Mr Hunt told broadcasters: “Well, the Bank of England says we are likely to be in recession. This is disappointing but not entirely unexpected news.”

He said the government now needs to “present a plan to the country to tackle the root cause of the issues we face – which is inflation – and a plan which protects the most vulnerable, and that is what I must do next Thursday.”

“According to the International Monetary Fund, around a third of the world’s economy is in recession this year or will be in recession next year.

“And that is principally but entirely because of very high global energy prices. We are not immune to that in the UK and what we need is a plan that shows how we are going to get through this difficult period. If it is a recession, how are we going to make it shallower and quicker, so that we can protect businesses who are really struggling, as these figures show.

“But also give families so hope that we’ll get through to the other side with the most vulnerable people protected.”

Shadow employment minister Alison McGovern has said today’s GDP figures come as no surprise to most people in the country, having faced months of financial strain as a result of the cost of living crisis.

“For many families in this country, today’s GDP figures will feel like a statement of the bleeding obvious,” she told Sky News.

“They’ve been struggling to deal with rising prices and an economic situation that has been very challenging for some time.

“I dont think anybody in the country will be surprised by this at all.”

She added: “Jeremy Hunt needs to recognise the ridiculous levels of turbulence that we’ve seen since September have come from the Conservative Party.”

The Liberal Democrats have accused the Tories of leaving the UK economy “smaller”, after the latest GDP figures found the UK economy had shrunk by 0.2 per cent between July and September.

Treasury spokesperson Sarah Olney said: “Today’s figures show the Conservative government is leaving our economy smaller and all of us poorer.

“People will never forgive this government for crashing our economy during a cost-of-living crisis and putting up their mortgages by hundreds of pounds a month.

“The Conservative party can never again claim that they are the party of sound money.

“Ministers must now do whatever it takes to protect households from the economic downturn they have caused, starting with a mortgage protection fund to ensure nobody loses their home this winter.”

Prime minister Rishi Sunak has said pay demands from unions representing nurses are “not affordable,” as the threat of strike action that will hit operations and appointments looms.

Mr Sunak said he shared the public’s “respect and gratitude” for nurses, and that he was pleased the Health Secretary was meeting unions to resolve the issue.

Steve Barclay earlier said discussions with Royal College of Nursing (RCN) general secretary Pat Cullen, the union leader behind the industrial action, were “constructive” and his focus was on patient safety and minimising disruption.