UK politics live: Badenoch admits Tories made mistake on Brexit as Reeves fire continues over weak economy growth

The “mood music is not great” with the UK economy stagnating, HSBC’s senior UK economist has warned.

Liz Martins told BBC Radio 4’s Today programme: “We had zero growth in the third quarter of this year, a bad start to the fourth quarter, and this number hasn’t done enough to offset that bad start.

“So it does suggest that we’re going to have very low or zero growth for the final quarter as well. We’re not in recession but we’re not doing much growing either.”

Chancellor Rachel Reeves is set to hold a meeting with regulators in No 11 on Thursday as she attempts to cut red tape and remove barriers to investment to kickstart sluggish growth.

The chancellor and business secretary Jonathan Reynolds will gather the bosses of the Competition and Markets Authority, Ofcom, Ofwat, Ofgem, the Office of Rail and Road, the Environment Agency and the Civil Aviation Authority to look at reforms to the way they work.

Reacting to the latest sluggish economic growth figures, Ms Reeves said: “After 14 years of economic stagnation, this government’s number one mission is to grow our economy. I will fight every day to deliver that growth and put more money into working people’s pockets.”

The paltry 0.1 per cent GDP growth for November means the UK economy would need to grow by at least 0.1 per cent in December just to avoid contracting overall in the final quarter of the year.

However, the Bank of England has pencilled in no growth again for the fourth quarter, following zero expansion in the previous three months.

Business secretary Jonathan Reynolds has admitted that he is worried about a potential tariff war when Donald Trump returns to the White House.

“It’s going to be a challenging time for anyone who is responsible for trade in a big economy because of some of those pledges that were made in the campaign,” he told Sky News.

Asked if he was worried about a tariff war, he said: “I am, because the UK is a very globally-orientated economy, so the exposure, the danger to the UK is actually greater than even some comparable countries around that.

“So, a lot of our work has been preparing for that, engaging early with the new administration.”

He added: “Ultimately, tariffs are paid for by your own people. So, it’s got real pressures in terms of inflation, in terms of your ability to employ people, to export to other markets.”

But he insisted that the UK was “well prepared” and had a “good argument to make” in trade talks with the US, and there is a “chance to get an even better relationship”.

The new GDP figures are unlikely to ease fears of stagflation in the UK economy, but make the prospect of a cut to the Bank of England’s base rate next month more likely, an analyst has suggested.

“This disappointingly modest return to growth for the UK economy is unlikely to ease stagflation concerns, with a recovery in service sector output helping drive only a slight strengthening in overall activity,” said Suren Thiru, economics director at the Institute of Chartered Accountants.

“November’s uptick is unlikely to have sparked a more notable improvement in economic activity across the fourth quarter with the dramatic damage to confidence from the budget and global uncertainty expected to have suppressed activity in December.

“Beyond the political noise, a key lesson from this financial market turbulence is the need to address our longstanding challenges of poor productivity and persistent supply side constraints, to help better insulate us against these external shocks.

“Though these disappointing figures make a February interest rate cut more probable, concerns over financial market fragility and heightened global inflation risks mean a policy loosening next month is not quite done and dusted.”

Business secretary Jonathan Reynolds said he is not “satisfied” with the latest economic growth figures for November and that Labour is still promising to have the highest sustained growth of any G7 country.

He told Times Radio: “Look, I’m not saying I’m satisfied with 0.1 per cent, but for monthly GDP figures what you want to see fundamentally is the economy growing.

“We do want that big impact over time, so we turn around what has been a really difficult decade-and-a-half.”

Asked if he would reconfirm the pledge of the UK having the highest sustained growth of any G7 country, he said was “more than happy to do that”, adding: “We want to measure that by people having rising household income.”

He acknowledged it is a “relative measure” that “depends what’s going on in other countries”.

The UK economy grew slightly in November after it shrunk in both October and September, latest official figures show.

Gross domestic product (GDP) rose by 0.1 per cent, according to figures published by the Office for National Statistics.

It marked a rebound after two months of contraction – although the ONS described the economy as “broadly flat” with no growth over the three-month period to November. Thursday’s figure was also below the 0.2 per cent rise many economists had expected.

It comes after a difficult past couple of weeks for the Chancellor Rachel Reeves, after government borrowing costs surged and the value of the pound slumped amid worries over the economy and UK debt levels.

Markets calmed on Wednesday after a surprise fall in inflation – but the paltry growth in the UK economy for November will lead to more questions.

Kemi Badenoch is to own up to a series of mistakes made by the Tory governments she served in but warned that Labour under Keir Starmer is repating the mistakes of Theresa May, Boris Johnson and Rishi Sunak.

In a major speech in central London on Thursday, the new Tory leader will admit that leaving the European Union “without a plan for growth” was a mistake by her party under Johnson.

It will be the first time a senior Conservative leader has admitted that the chaos wrought on the UKand damage to its economy caused by Brexit was a huge error.

Our political editor David Maddox has the full report: