THE Tories were accused of “sitting on their hands” after a paltry 0.2 per cent rise in gross domestic product (GDP) was reported today, renewing fears of a recession.

August’s meagre rise followed a sharp fall in July and was due to a jump in business services during a downturn in construction and manufacturing, according to the Office for National Statistics.

This fuelled that fears the Bank of England will keep its base rate of interest at its current high level of 5.25 per cent.

TUC general secretary Paul Nowak said: “The Prime Minister and Chancellor are sitting on their hands as the economy falters. They have no plan to get our economy growing and no plan to boost living standards.

“This inaction is a recipe for disaster. It will heap more misery on households up and down the country.

“After 13 years of Conservative government, Britain is broken. The Tories have presided over the longest pay squeeze in modern history, anaemic growth and an explosion in insecure work.

“It’s time for an economic reset. Working people urgently need a proper plan to deliver decent jobs and rising living standards.”

Unite general secretary Sharon Graham said: “The continued stagnation of GDP demonstrates that no political agenda can afford to be dependent on high growth in the short to medium term and without some radical change it will prove all but impossible to deliver. 

“We need to fix our broken economy right now and not allow growth targets to be used as an excuse for delay or a smokescreen for fresh rounds of austerity.”

Shadow chancellor Rachel Reeves said that Britain’s economy under remains “trapped in a low-growth, high-tax cycle that is leaving working people worse off.”

She pledged: “Labour will get our country building again so we can boost growth, make working people better off and get Britain’s future back.”

Hargreaves Lansdown head of money and markets Susannah Streeter said: “We still haven’t felt the full effect of previous rate hikes and so the prospects of recession are still looming on the horizon with so little respite expected on sideswiped budgets.”

Ruth Gregory of the Capital Economics consultancy predicted that the economy would shrink for the next two quarters, which is the definition of a recession.