Rachel Reeves on red alert as snail-paced growth sets up Budget tax bombshell

This morning, official figures revealed that the UK economy grew by just 0.3% between April and June, less than half the 0.7% seen in the first quarter. It's yet more bad news for the Chancellor, even if she put a brave face on it.

The grim truth is that the UK economy is now expanding more slowly than in the final months of the doomed Rishi Sunak regime. Last year, GDP rose 0.9% in the first quarter and 0.5% in the second, a combined 1.4%. Reeves's tally for the same period is just 1%.

The useless Tories were voted out by a furious electorate, yet Labour is consistently delivering worse numbers. Reeves has had the cheek to claim she's fixing the economy, but in truth she's smashed it to pieces.

Today, she was saved by a 0.4% bounce in June, after monthly falls of 0.1% in both April and May. Growth is now so sluggish even "snails would scoff," Liberal Democrat Treasury spokesperson Daisy Cooper said.

Tory Shadow Chancellor Sir Mel Stride accused Reeves of "economic vandalism" with business indicators "flashing red." At this rate, the £50billion black hole in the nation's finances isn't closing soon.

Unless growth picks up fast, the chancellor will have to find the money elsewhere. And that means more tax.

Much of the blame lies with Reeves's own policies. Her £40billion tax raid in last October's budget, including that notorious National Insurance hike on employers, has hit business growth and jobs.

The rising minimum wage, persistent inflation, high energy bills and endless red tape have further knocked confidence and stalled growth.

For households and businesses, the outlook is bleak. Higher taxes would depress growth further, hit jobs and squeeze incomes. Yet Reeves shows no sign of changing course. The danger is a vicious circle of weak growth and rising taxes.

Speculation over which levies will be hit next is already corrosive. Inheritance tax is the latest target, with talk of a lower threshold or higher rate. Capital gains tax could rise, council tax bands be revalued and pension tax relief curtailed. A wealth tax remains on the table.

The problem is that none of these measures alone can close the fiscal gap. That leaves the "big three" in play: income tax, National Insurance and VAT.

Touching any of these would be politically explosive, given Labour's manifesto pledge not to raise them.It would destroy what little credibility Reeves has left.

The global picture is already fragile, and Donald Trump's tariff threats haven't helped, although the UK has avoided the worst thanks to Keir Starmer's trade deal.

Yet the fact that a tiny GDP bump is being celebrated may be the scariest sign of all. Reeves has taken a bad situation and made it worse. And she's poised to double down in her autumn Budget. We're in an economic "doom loop", and 0.3% growth won't get us out of it.