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Hello and welcome to Coffee House Shots. I'm Lissy Dunn and today I'm joined by James Heel and Tim Shipman.

The news today is that the UK economy has unexpectedly shrunk in October in a blow for

Chancellor Rachel Reeves. James, what does this mean for the Chancellor? What does this mean for the Labour government?

Yeah, so GDP fell by 0.1% in the three months to October, according to the figures by the O&S.

That came after, the contraction came after a growth of 0.1% in the three months to September.

So it means that basically all the kind of pre-budget run up, all the speculation about tax rises, all the doom and gloom and the music, seem to affected bets of the economy, particularly in construction and manufacturing. And really, it's just another example of two things, one of which is the sort of absolute failure under this government, and in fairness, by the last, as well, to unleash any kind of animal spirits, any kind of sense of confidence in the economy. And I think second of all was just how debilitating the political process was around that budget. So I think that overall it's going to be a pretty bad end to the year for Rachel Reeves, who of course keeps saying that her growth is on more on priority. And yet, I think very much in what she's been doing in office, it's often putting short-term political fixes ahead of any kind of long-term growth missions. So overall, it's just another sort of bad sign. The only potential upshot would be that because of our weak growth, we might see another rate cut. Given what Rachel Reeves is saying around sort of the government's She always likes to say, well, we've had five rate cuts. So we might have a sixth, but of course, that is a product of how bad we are in terms of economic growth. Yeah, I mean, look, we've got a toxic combination of economics and politics, as I've said before. I mean, you know, James rightly says that this suggests that the run-up to the budget was damaging, but we haven't even seen the full effect of that yet.

I mean, the budget was on the 26th of November.

The final quarter of the year could be just as badly affected by all that speculation, whether or not income tax was going to be raised.

And clearly, stuff like construction, people want certainty before they invest vast sums of money in this kind of stuff. What Reeves would say is, oh, I am doing things to boost

growth. And she spent quite a lot of time trying to persuade the Office of Budget Responsibility that

she was doing things that might boost growth. I mean, one of, you know, she talked about the

India trade deal. She talked about some of the stuff they're doing on planning reform. But none of it was significant enough for the OBR to score in the budget because it's either too far off or it doesn't yet appear to have made that much of an effect. And bluntly, a lot of this stuff might come good

in two, three, four, five, six, seven, eight years, but it's not going to do the Labor Party

any good in the final quarter of the year, or indeed in the first two quarters of next year,

which is when bluntly Kirstarmer needs to show some progress. Because, you know, the big

thing that we're all building towards is those May local elections, which will tell us a great deal about the sort of shape of the

rest of this Parliament. And more immediately, for both Stalma and Reeves, it could have big

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