Uncertainty over upcoming budget could 'snub out' UK growth, Andy Burnham warned

See more This is Money on Google - save us as a Preferred Source Updated: 17:00 EDT, 13 August 2026 The Prime Minister was last night warned that uncertainty over the Budget could 'snuff out' growth in the fragile economy.Official figures yesterday showed output rose 0.4 per cent in the second quarter of the year as warm weather and the World Cup boosted business in June, offsetting the hit from the Iran war.But that was weaker than the 0.6 per cent expansion in the first three months of 2026, with analysts warning of worse to come as higher prices and elevated borrowing take a toll.The report underlined the task facing Andy Burnham and his Chancellor John Healey, who have vowed to 'drive growth in every postcode'. It is feared their plans will involve £25billion of tax hikes, hammering households and businesses, and putting the economy into reverse.At the same time, Treasury officials said the economy will grind to a halt if Donald Trump continues his war on Iran, with growth set to be just 0.3 per cent next year. Challenge: Prime Minister Andy Burnham, left, and his Chancellor John Healey who have vowed to 'drive growth in every postcode' of the UKMartin Beck, chief economist at WPI Strategy, said: 'The outlook remains exposed to both international shocks and domestic policy mistakes.'Progress in the Middle East could once again unravel, while October's Budget could impose significant taxes on investment and capital or put fresh obstacles in the way of businesses responding to market signals. Another prolonged bout of speculation about what the Chancellor might announce would encourage businesses to delay hiring and investment, even if the eventual tax increases prove less severe than feared.'A stronger outlook is now plausible, but policy still has the power to snuff it out.'Yael Selfin, chief economist at KPMG, said: 'The UK economy closed out the first half on a strong footing, but momentum is likely to fade over the coming months.'Attention will turn to potential changes in fiscal policy in the Budget. Any prolonged period of speculation around fiscal policy could cause firms to delay investment decisions and households to take a more cautious approach to spending.'The figures from the Office for National Statistics showed that while the services sector has grown since Labour came to power, output in manufacturing and construction has shrunk.'Growth in every postcode? How about growth in every sector?' said Simon French, economist at Panmure Liberum.Mike Randall, chief executive of Simply Asset Finance, which helps fund small businesses, said: 'Growth in every postcode' needs to stop being a party slogan and actually translate into removing the barriers that stop good businesses getting on with the job.'DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you